FX Outlooks
Disclaimer - these views may perhaps change in the future, as I become more informed & new data comes along because just like the FED & other CB’s, we’re data-dependent!
Let’s get into it - shan’t we?
USD: I remain bullish, as I’ve been for the past few weeks, due to an expected risk-off sentiment arising. We’re slowly starting to see supporting data for this view - for eg; we’ve seen higher indications of inflation, beating analysts’ expectations, such as PPI & PCE. Furthermore, T-Bills are at 5% which backs this view as global investors take money from risk-on & place it into risk-off markets. A 5% return on your money is great! Which risk-on spot market have you seen produce 5% recently.
GBP: Much to everyone’s surprise, I think Rishi will be our saviour; this whole short GBP trade is overcrowded & overextended. It’s too expected, and markets must have losers. I’m bullish on GBP as we’ve seen PMIs (mfg) above 50 (expansion signal) which we haven’t seen in a long time, telling us our country is producing (leads to growth). Also seen CBI realised sales come at 2 from an expected -23 (!). However, I can’t say I’m too confident on this trade because UK CPI has declined in 3 consecutive reports, but by very small margins - yet there’s talks about BoE slowing rate hikes whilst infl remains at double-digits. I think data for GBP will be great among the next few months, and that our country has been underrated. How you want to take this is important - many would obviously go to cable, but them both being bullish isn’t too representative of the £. EURGBP could be a nice play.
EUR: I remain quite bearish on due to Germany, mostly; productivity levels are expected to slump by a landslide, and we start to see negative econ data coming along. Euro news show the inflation fight isn’t won, across many of the states. Primarily why I recommend taking EURGBP, as we’re bullish & bearish on each currency, making it a clear trade.
JPY: waiting for $ domination to take USDJPY up to highs, and i want to buy JPY in April because Kuroda (BoJ Gov’nor) will be retiring as Gov’nor and a new guy will come in, hopefully abandoning the YCC (Yield Curve Control) policy, making Yen buys look attractive. Hopefully by this time, my $ stance switches so I can take USDJPY shorts (JPY buys), or I’ll find another pair to trade.
Summary:
USD longs
GBP longs
EUR shorts
JPY longs