AUDJPY: A reality check on the risk rebound - TD Securities

"Dovish pivots by the Fed and other CBs combined with hopes an end to the US-China trade tensions have contributed to the return of confidence," note TD Securities analysts.

Key quotes

"The bounce now looks tired, however. Momentum has eased just ahead of the 200dma and near the key 61.8% Fibo level; the daily RSI is also approaching 'overbought' levels. This leaves the spectrum of risky assets vulnerable to correction if the latest bullish consensus is challenged for any reason."

"FX investors looking to fade the prevailing risk-on consensus could look to short-dated AUDJPY downside structures to position for a potential pullback in confidence. Historically, AUDJPY has the highest correlation to the S&P among G10 crosses."

"The RBA's dovish capitulation this week highlights renewed downside risks for AUD in general while we retain a broadly-bullish JPY outlook overall. Vol remains subdued while risk-reversals also suggest favorable levels to enter downside."