Societe Generale Research maintains a buy-on-dip bias for AUD/UD, looking to go long on a dip into 0.70.
"Yuan stability will affect market sentiment on a day-to-day basis and eventually limit how far EUR/USD can go. But we're a long way from that being an issue in 2018/2019 when EURUSD average 1.15, the 10-year real yield differential between TIPS and Bunds averaged 180bp. Now its 50bp. That's the move which underpins a stronger euro and because the spread move has stalled, the euro too, has settled into this annoying range," SocGen notes.
"We have considerably more confidence that the AUD's next big move will be above 0.8, not below 0.6, and is probably best traded by waiting for a slip closer to 0.70 to go long with a stop just below that level," SocGen adds.