Consider selling AUD, and NZD against the CAD this week, advises Barclays Capital
"G-10 commodity currencies face the unfavorable combination of falling commodity prices, lower global demand and high volatility. Our Dutch Disease analysis suggests AUD and NZD are most vulnerable. Both countries have large net foreign debt obligations and have experienced the greatest deterioration of their manufacturing sectors, only partially offset by high labour mobility/efficiency, Barclays says as a rationale behind this call.
"In the context of ongoing downside Chinese growth risks, to which New Zealand and Australia are more exposed, we recommend selling AUD and NZD against the CAD," Barclays advises.
"Our analysis also suggests that relative value exists within G-10 commodity currencies for those investors who are concerned about positioning or wish to remove USD risk. In particular, we find that the oil commodity currencies, NOK and CAD, are far less vulnerable than their Antipodean counterparts," Barclays adds.
To me, this sounds like a long-term trade not something to rush into this week but with oil higher on Monday, it's off to a good start.
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