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#1 02-01-2019 08:32:40

Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 2801

USB bank's 3 favourite trades for 2019

USB bank's 3 favourite trades for 2019

Trade No. 1: Long AUD and NOK versus short CAD and USD

UBS likes the EUR/USD but prefers buying NOK as a proxy for the EUR.

Norway's tightening cycle has already started and its pricing on the markets is moderate;
Activity data remained firm;
Risks are moving towards a more aggressive Norges Bank as euro area growth stabilises and Norway's expansion continues.
AUD offers a significant improvement in carry ... a good expression of our downside view of the US dollar.

The markets maintain low expectations, with only 10 basis points for an RBA rise by 2020;
Also significant: China's stimulus measures, iron ore price resistance and low valuation;
Tightening cycles in the United States and Canada are beneficial.

Forex valuations are high: USD and CAD are 13% and 5% higher than their respective core values.

Trade No. 2: Buy the USD/CNY

Continued deterioration of China's current account position and divergence of monetary policy between the United States and China (the Chinese administration will maintain its easing bias);
There are signs that the deterioration of the current account has begun to weigh on the currency;
Domestic demand will remain relatively strong compared to export growth.

Trade #3: Buy the EUR/CHF

The re-emergence of European systemic risk (Italy, Brexit) in 2018 has boosted the demand for assets perceived as "safe havens", such as the CHF. However, the risks are now probably oriented towards relaxation;
Temporary factors and unfavourable base effects have probably weighed down on euro area activity since the first quarter. As these gradually dissipate, the growth dynamic should also stabilise.

"Anything worth having is worth going for - all the way." - J.R. Ewing



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