Back
16 Apr 2014
Still long NOK/SEK and AUD/NZD - Societe Generale
FXStreet (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale, keeps the long trades in NOK/SEK and AUD/NZD based on divergent monetary policies.
Key Quotes
"As for small pleasures... every day in recent weeks I have written that we are staying long our two favoured relative value FX trades, NOK/SEK and AUD/NZD. They are supposed to be good ideas for days when EUR/USD and AUD/USD are range-bound, which has been the case for a while now... Both are doing very well and deserve more attention as monetary policy divergence plays out in FX."
"Norwegian rates have been diverging significantly from Swedish rates since January, as their respective inflation profiles continue to diverge. Swedish March CPI inflation fell to -0.6% Y/Y."
"The annual CPIF underlying inflation rate is 0% Y/Y, and hasn't been negative since 1988. By contrast, the Norwegian underlying inflation rate rose to 2.6% YoY in March."
"The chances of a further rate cut by the Riksbank in the third quarter are rising. Keep long NOK/SEK, targeting 1.14."
Key Quotes
"As for small pleasures... every day in recent weeks I have written that we are staying long our two favoured relative value FX trades, NOK/SEK and AUD/NZD. They are supposed to be good ideas for days when EUR/USD and AUD/USD are range-bound, which has been the case for a while now... Both are doing very well and deserve more attention as monetary policy divergence plays out in FX."
"Norwegian rates have been diverging significantly from Swedish rates since January, as their respective inflation profiles continue to diverge. Swedish March CPI inflation fell to -0.6% Y/Y."
"The annual CPIF underlying inflation rate is 0% Y/Y, and hasn't been negative since 1988. By contrast, the Norwegian underlying inflation rate rose to 2.6% YoY in March."
"The chances of a further rate cut by the Riksbank in the third quarter are rising. Keep long NOK/SEK, targeting 1.14."