AUD/USD, EUR/AUD flows - AUD Underappreciated

  This is typical when a larger move spill over across DM, but AUD is not the EUR.  Australia has little correlation to events in France.  Additionally, AUD is a DM high yielder, with the policy rate spread is favour of the RBA.  Government bond markets feel that 10yr AUD yields are high enough long-term and the spread versus the U.S. has narrowed in September – see below.  The FX market could come to appreciate the AUD more and one way is short EUR/AUD.  Any EUR bounce should see a similar move in AUD/USD, but any further EUR selloff is unlikely to be matched by the AUD.