Investors are downbeat today, and these strategists think there is more gloom ahead.
Ready for some good economic news? Don't ask the currency strategists at Barclays Capital.
"We continue to expect the global backdrop to firm and for commodity currencies to do well," they wrote in a note to clients.
"But with our economists expecting Chinese data to be mixed next week (with GDP printing below the consensus) and for the FOMC minutes to highlight the deterioration in the U.S. economy, confirmation of an improving outlook is unlikely to be delivered just yet. In its absence, global business confidence is likely to remain under pressure. And given the fairly strong correlation between our index and US equities, it suggests that risk sentiment will remain under pressure as well."
So they are closing out a short euro-Australian dollar trade.
The BarCap strategists are also skeptical that the Bank of Japan will deliver the interest rate cut that is a current topic of investor chatter. So "with the BoJ expected to disappoint at the same time as concerns about the global economy grow," they suggest selling the dollar against the Japanese yen.
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