Summary: Saxo Bank's latest report on the FX Options space is now live, with analysis of the Reserve Bank of Australia's dovish shift and the consequences for AUD pairs.
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EM FX Carry Trade Update September 23 2019
Conditions for carry traders have been very supportive outside of a rather firm USD of late, as risk appetite has not even been fazed by the USD liquidity issues that required the Fed to begin ad hoc liquidity operations to smooth over the situation. We're a bit more concerned about the outlook, especially given the Fed's lack of a more cautious stance at the most recent meeting, not to mention a sign or two that US-China trade deal talk may not lead anywhere next month.
FX Update: Ugly flash EU PMI’s pressure EUR
EURUSD languishing below the pivotal 1.1000 area and the greenback is generally bid after September flash PMI’s in Europe suggest a bad situation is getting worse, led by German manufacturing. The risk remains of a broad USD break out to the upside until the Powell Fed shows signs that it is getting ahead of the policy curve, something it has proven reluctant to do.
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