We are revising selective currencies in light of our view that Fed rate hikes will be postponed to December and the oil price collapse. We have been stopped out of our long-held short EUR/USD trade in our FX Trading Portfolio and we are now sidelined.
EUR/GBP: We have adjusted our forecasts slightly higher to 0.71 (previously 0.70) in 3M, 0.70 (was 0.69) in 6M - we have kept our 1M and 12M forecasts unchanged at 0.71 and 0.72.
USD/JPY: With the Fed moving later than initially projected, we now see much less potential for a higher USD/JPY short term. Hence, we have revised our forecast lower, expecting USD/JPY to trade in a range around 120 in 1M to 3M.
We have revised our call on Norges Bank and now expect it to cut rates by 25bp in September. Based on this and collapsing oil prices, we have raised our EUR/NOK forecasts to 9.40 in 1M, 9.50 in 3M, 9.25 in 6M and 8.80 in 12M.
We maintain our negative view on emerging market currencies, particularly on commodity and Asian currencies.
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