Westpac write "AUD has absorbed a.......>

EURO-AUSSIE: Westpac write "AUD has absorbed a great deal of negative news on

US-China trade relations over the past month, driving notable underperformance

against EUR. The turmoil included the US's planned new tariffs on Chinese

imports, the long-awaited break of USD/CNY 7.00 and the US's swift response to

formally label China a currency manipulator. There is unlikely to be any real

improvement on this front in coming weeks, keeping a lid on AUD on crosses given

it appears to be the market's proxy of choice for US-China trade news. But a

gloomy picture may be broadly priced in, with spec AUD positioning firmly short.

Australia's record trade surpluses provide a strong starting point if there is

to be trade contagion in coming months. A steady hand from the RBA in Sep plus

resource company dividend payments should also help AUD near term. Meanwhile,

the ECB on 12 Sep should deliver at least a rate cut and pledge to resume asset

purchases, while leaving the door open to further easing measures. This should

see AUD recover a little of its lost ground multi-week, to around EUR 0.6150/60

or AUD 1.6250. It is hard to see the Aussie much firmer though without an

unexpected improvement in global trade."