Australian Macro Outlook:
June private sector credit is expected to have risen 0.4%, with housing lending up 0.6% but business credit just 0.2%.
Chinese PMIs have been steady that is a good sign for Aussie trade.
Our RBA outlook (on hold for some time) is anchoring front end valuations. There has been a partial recovery in Australia's key commodity prices, after very steep declines in April and May. However, beyond multi-week gains, a firmly on hold RBA is likely to keep a lid on AUDJPY, easing towards 90.50 levels by Q3-end.
Japanese Macro Outlook:
Business sentiment improved from end of last year, but remains cautious.
While the PMI rose as services strengthened and manufacturing declined.
Wage inflation has been remained anemic.
Inflation expectations have been flat since the BoJ introduced its inflation overshoot commitment.
Option Trade Recommendations:
Capitalizing ongoing rallies of the underlying spot FX, we advocate shorting a 3M in premium-rebate notional and buying a 6M 80.00 AUDJPY one-touch put.
Buy 4M sell 2M AUDJPY OTM put at 82 strike in 1:0.753 notionals.


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