FX brief
Below please find a short comment on major currencies and our tactical positioning.
EURCHF
Following the global risk on inclination of equity markets it looks like it is abandoning the strengthening trend started in may. It strengthened towards 1.14 with the Eur that is also a technical resistance. Two factors support a more bullish view for the CHF. 1) the SNB is clearly searching away out from NIRP, 2) it is a good hedge in case of generalized risk off, and we expect February to be a bit cooler than January.
EURGBP
The Brexit saga is preventing the BOE from increasing rates. For now, we are playing the trading range 0.86/0.9ish with some success. We expect this situation to change some times in the future with a weaker GBP long term.
EURUSD
Here comes the tricky part. The USD is in nomens' land after strengthening vs EUR in June and structurally weakening towards the rest of the world over the same period. The FED declared its intentions last week and the minutes will be available shortly. This week we'll see also the PMIs and other data left behind due to the shutdown. We expect a slowing strong economy and therefore a rate increase in June. We had a fully hedged position for months and we are now slightly long.
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