Clarity could be the theme of the week ahead
Analysts at Westpac see a respite in the markets in the week ahead with the US heading out for a holiday and a quiet calendar.
"With no major events scheduled in the week ahead that might bring about some much needed clarity on key risks including Brexit, US-China trade tensions and Italy," they write.
They have two trade ideas. The first is long AUD/NZD:
AUD/NZD is testing rising support but could still flush toward 2018Q2 lows around 1.0500 if risk aversion continues. In the interim we watch this trade an opportunistically enter on either a flush below 1.0550 or a shift in risk aversion.
The other is CAD/JPY, where they say loonie underperformance is overdone.
"The 30% fall in energy prices from recent peaks and risk averse markets suggests more attractive entry levels for CAD/JPY could emerge toward the Aug 2018 lows of near 83.80," they write.
The overarching theme is that they see a chance of risk trades getting hit harder but that they will look to buy the next big dip.
