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Forex pairs in this Article » EUR/USD, USD/CHF, GBP/USD, USD/JPY (Bali) - The AUD, NZD and CAD remain expensive overall, on measures both of real effective exchange rates and our in-house longterm models, notes Societe Generale, with Strategist supporting longs in USD, NOK and GBP for 2014.

Key Quotes

"The Australian dollar is also exposed to our cautious near-term views about China’s economic growth."

"Our models see GBP close to fair value, but it is still cheap on a REER basis. It will also be supported by the limited ability of the BoE to fight the repricing of short sterling futures, given the inflation credibility problem."

"And of course the USD is still cheap even after the small rise of the past two years (Graph1). On the funding leg, we like to be short JPY, even as valuation now looks extreme (cheap) – don’t fight the determination of Abe and the BoJ just yet."

"The EUR and CHF aren’t cheap, or even rich in regards to their cyclical position relative to the US and the UK. The ECB will be pressured to ease more, while the SNB still faces deflationary forces and will continue to defend the floor in 2014."

"Our preferred G10 basket is thus long USD, NOK and GBP vs JPY, CHF and EUR."
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