ANZ on the month ahead: EUR, GBP look vulnerable, tenuous.

Comments from ANZ on what they expect as themes ahead in September.

• the market is fixated on inflation expectations and real yields, pushing narratives of shifting secular trends and long term USD weakness. We are still not convinced by this.
• For the USD to maintain its weaker trend, we think the cyclical growth story of a global recovery needs to extend. While we have a high degree of confidence that that will be the case on a six-month horizon, in the next month we see a number of threats.
• this suggests that, at least temporarily, the USD may find its feet
• In this context, the EUR looks vulnerable in the short term. It was the prime beneficiary of the USD's weakness and will be experiencing some growth issues of its own in the next couple of months.
• GBP is also looking increasingly tenuous. It has rallied despite little progress in Brexit trade negotiations; and with the October deadline looming, it too may struggle.
• AUD should hold up relatively well