USD: Bullish
"We stick to our bullish USD view. Recent comments from Fed Governor
Lockhart suggest that September is still very much in play, and as
markets bring the timing of the first hike forward, this should support
USD."
EUR: Bearish
"The EUR has been difficult to trade recently given that European
stories such as Greece or the ECB have gone away from the market’s
focus. Instead we expect EURUSD to trade lower on more optimism on the
Fed. The US side of the story will dominate trading this pair."
JPY: Neutral
"We remain bullish on JPY for a few reasons. First, we continue to see
signs of domestic reflation that could bring the BoJ closer to
tightening. Second, with commodity currencies falling, the risk environment may be
pressured, which will also support JPY. The main risk here would be a
China stimulus which supports risk and weighs on JPY."
GBP: Neutral
"The inflation report was more dovish than the market was expecting,
causing GBPUSD to move below 1.55. For the path
of GBPUSD over coming weeks we put most emphasis on the USD side. With
Lockhart putting a September rate hike firmly in the market’s mind now,
as rate expectations rise, this should support the USD side."
AUD: Bearish
"Commodities are likely to weigh on AUD, and we retain our medium term
bearish AUD view. However, we see two possible legs of support in the
near term. First, the RBA has raised the bar for cuts, and as the market
digests this, the currency may benefit. Second, any growth supportive
fiscal stimulus in China would likely benefit AUD the most within the
G10 space. We would look to sell on rallies."