We see a number of downside risks for the commodity-bloc currencies in the week ahead. China’s official NBS PMI dropped below 50 to 49.7 and the final estimate of Caixin/Markit PMI weak at 47.3. Furthermore, the RBA did not cut rates nor alter its statement significantly but market pricing remains very benign (just a few basis points of easing priced over the next two meetings) and would be more vulnerable to a dovish surprise. Canada’s Q2 GDP on Tuesday should fall by 1% q/q annualized putting the economy in a technical recession. We think the latest rebound in oil prices will not prevent the BoC from delivering more accommodation on September 9 via a 25bp rate cut, which is only partially priced in. We remain long USDCAD and long GBPAUD in our recommendations portfolio. The rebound in oil is the greatest risk to these views. [BNPP]
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