TD Research discusses the current conditions of the FX market and some of its preferred tactical views.
"For the all the headline ping-pong this week the broad USD actually looks set to end the week lower. That partly reflects the fact that US risk assets are no longer immune to the trade skirmish, especially as some critical data releases massively underperformed expectations. Past strength of the USD will have negative implications for both growth and earnings. These drivers probably keep FX in wait-and-see mode until the G20," TD notes.
"Still, this backdrop remains supportive of cross trades. We showed yesterday that short-term value trades have outperformed momentum. Following that script implies trimming short exposure to GBP and adding long GBPCHF.
On the flip side, AUD looks rich and that implies around a 1% move lower in AUDNZD. We also like downside in AUDCAD going into the BoC meeting next week," TD adds.