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FX Top Trades 2014: How To Position For The Coming Year‏

ByDanske Markets
Published 12/09/2013, 04:59 AM
Updated 05/14/2017, 06:45 AM

One positive supply shock, four implications, and 10 FX trades:

For the fifth time, we present our year-end FX Top Trades for the coming year.

This year's trade ideas are based on the view that the global economy will face very low inflation in 2014 primarily due to falling commodity prices and plenty of spare capacity in most economies. The low inflation will work as a positive supply shock to the global economy and should have a number of implications that, in our view, will drive the FX market in 2014.

The positive supply shock will (i) support the global growth recovery, (ii) put focus on relative monetary policy as global central banks will react differently to the low inflation, (iii) put focus on alternative monetary policy tools as interest rates have already reached zero in many countries, and finally (iv) underline that investors will have an EM and commodity scare as developed markets will be favoured over emerging markets and not least commodity-producing countries.

FX Top Trades 2014

1: Short EUR/USD via long USD/CHF
2: Bullish USD/JPY straddle
3: Short EUR/GBP
4: Bearish EUR/SEK seagull
5: Bearish EUR/NOK risk reversal
6: Bullish EUR/CZK ratio forward
7: Short AUD and CAD vs USD
8: Long TRY/DKK
9: Sell 12M USD/CNH
10: Long RON/PLN

To Read the Entire Report Please Click on the pdf File Below.


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