Since New Year, the FX market has kept focus on Chinese growth worries, geopolitical risks, ECB (in-)action and a possible Fed tapering pause. While China and recently Ukraine risks have hit risk appetite, the trust in Fed action should these issues eventually hit global growth negatively has limited the potential for USD strength for now. In the Scandi sphere, deflation risks and fears of a Riksbank cut have notably led the Swedish krona to suffer more than its Norwegian counterpart recently.
In this FX Trends publication we present in-depth views on the major currencies and suggest three recommendations to play these views: go long GBP/JPY spot, sell a 3M EUR/CHF in-the-money put spread, and enter a bullish EUR/USD 3M (ratioed) seagull.
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