Still bearish AUD but expect some resilience in 4Q

If underlying demand for steel improves over the coming months, Australia's key exports of iron ore and coal are likely to benefit. The broader macro backdrop for AUD remains negative, especially if the RMB continues its depreciation path and capital inflows into the resource sector slow. 

"But with the Fed delaying lift-off, the Reserve Bank of Australia (RBA) sticking to a firmly neutral stance and steel prices looking set to stabilize, we are comfortable with our "conservative" end-2015 forecast of 0.69 for AUD/USD. From a trading perspective, we think there is scope for EUR/AUD to move lower towards 1.52, as the policy divergence between the ECB (expected to extend QE in October) and an on-hold RBA becomes a stronger driver of the pair", says BofA Merrill Lynch.