Currency investors should consider selling AUD/JPY this week, advises Credit Suisse in its weekly FX pick to clients.
Rationale: "We believe expectations for the RBA to eventually cut could grow if Bank of Canada cuts to 0.50% as we expect. The market is pricing in around 4bp for the next RBA meeting and 25bp by July. Meanwhile we expect JPY to continue staying bid as poor Chinese data, volatile US equities, and falling oil dominate the headlines, CS says as a rationale behind this call.
Risk: "The main risk we see is from positioning already having started to shift in the trade's favour," CS adds.
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