DB advocate keeping it simple and therefore see the Australian dollar down further.

This in brief from an overnight note:

There's merit in keeping it simple, by appealing to trusty relationships:

  • Equities look vulnerable to more downside given the poor data flow and heavy positioning . That would get EM underperforming DM, which tends to weigh on AUD
  • Trade tensions ratcheting up will keep a lid on Asian export growth. Exports are currently falling a little year-on-year, and AUD has tended to be pressured unless they're growing above 5%
  • China's manufacturing PMI remains sub-50 - that's also consistent with a falling AUD And China is showing limited appetite thus far for policy stimulus that could change that

As for levels:

  • A drop beyond 65c for AUD/USD seems hard, given the USD leg could struggle with likely Fed easing and the risk of intervention. AUD/JPY likely has more downside though

Tom Jones' Kiss approach: