AUD: Scope For A positive Surprise In China's Data; Sell Rallies - Credit Agricole

Considering limited room of further falling Fed rate expectations from the current levels risk sentiment will be driven by this week’s Chinese PMI releases.

Our economists see scope of a positive surprise, but do note that a trend towards further weakness remains in place.

This in turn suggests that China related uncertainty is likely to remain in tact. As of now we remain in favor of selling commodity currencies such as the AUD on rallies.

This is especially true as there is limited room of rising RBA rate expectations from the current levels and as speculative positioning is close to overbought territory.

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