Playing the ranges
What happened overnight
* AUD Q2 capex above consensus, mining pipeline still robust
* Brazil cut rates 50bp as expected, signaled shift in guidance
* Italy successfully auctions 2017 and 2022 paper
Euro crosses continued to squeeze higher overnight, in a generally risk negative environment. EURAUD and EURCAD, two of the market’s favorite shorts earlier this year, were both higher overnight, as investors continued to unwind EUR-funded long risk positions ahead of September’s packed event risk calendar. This has hardly been a rapid or disorderly process, as shown by price action in both crosses, but it has contributed to keeping EURUSD supported, somewhat at odds with price action in the 2-year interest rate differentials, currently trading just a few bp above all time lows.
Click here to read the full report: FX Daily
Credit Suisse