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26 Feb 2015
Shocks from Fed, oil and ECB’s move to QE, creating a vacuum in FX – SG
FXStreet (Barcelona) - Kit Juckes of Societe Generale, prefers going long in GBP/JPY & AUD/NZD, and short in CHF/NOK against the backdrop of Fed uncertainty, oil price slump and ECB’s QE move.
Key Quotes
“The prospect of a shift in Fed policy promises a move to a sustained period of higher volatility, but the talk of patience, and the emphasis on flexibility when the Fed finally acts, soften that effect. At the same time, the shocks from the fall in oil prices, and the ECB's move to QE, are behind us leaving the market is something of a vacuum.”
“Away from FX, the calmer waters lead to a return of the search for yield, with corporate bonds and equities both benefiting, which is nice for them....”
“Against this backdrop, we'll stick with longs in GBP/JPY, shorts in CHF/NOK, relative value longs in AUD/NZD, and frustration in our search for bigger stories.”
“We're not alone in looking for further dollar strength in due course, and that is reflected, notably, by the weakness of the bounce in the vast majority of EM currencies. A broader dollar correction, if it happens, is likely to be led by EM.”
Key Quotes
“The prospect of a shift in Fed policy promises a move to a sustained period of higher volatility, but the talk of patience, and the emphasis on flexibility when the Fed finally acts, soften that effect. At the same time, the shocks from the fall in oil prices, and the ECB's move to QE, are behind us leaving the market is something of a vacuum.”
“Away from FX, the calmer waters lead to a return of the search for yield, with corporate bonds and equities both benefiting, which is nice for them....”
“Against this backdrop, we'll stick with longs in GBP/JPY, shorts in CHF/NOK, relative value longs in AUD/NZD, and frustration in our search for bigger stories.”
“We're not alone in looking for further dollar strength in due course, and that is reflected, notably, by the weakness of the bounce in the vast majority of EM currencies. A broader dollar correction, if it happens, is likely to be led by EM.”