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13 Jun 2013
Flash: Position for a cyclical lift in USD on a selective basis - JPMorgan
FXstreet.com (Barcelona) - The arguments for an extended, broad-based USD rally are not compelling, says FX Strategist at JP Morgan John Normand.
In view of Normand, and amid the talk of QE tapering, "the returns from owning dollars preemptively well ahead of Fed tightening have been patchy."
Normand finds the idea of be positioned for a cyclical lift in USD on a more selective basis much more compelling, focusing on "those currencies which are either overvalued and vulnerable to a reversal of major bond inflows (AUD and NZD), or where monetary policy is most divergent (JPY)" the JPM Strategist says.
Normand suggests "to have a strategic USD long position to one pair (USD/JPY), also of holding tactical USD longs versus currencies like CAD and CHF as the US rates market turns and of avoiding shorts in European currencies like EUR/USD if their balance of payments was stronger than the US and its growth gap about to narrow."
Year-end targets for EUR/USD and USD/JPY stand at 1.30 and 105.00 respectively, Normand concludes.
In view of Normand, and amid the talk of QE tapering, "the returns from owning dollars preemptively well ahead of Fed tightening have been patchy."
Normand finds the idea of be positioned for a cyclical lift in USD on a more selective basis much more compelling, focusing on "those currencies which are either overvalued and vulnerable to a reversal of major bond inflows (AUD and NZD), or where monetary policy is most divergent (JPY)" the JPM Strategist says.
Normand suggests "to have a strategic USD long position to one pair (USD/JPY), also of holding tactical USD longs versus currencies like CAD and CHF as the US rates market turns and of avoiding shorts in European currencies like EUR/USD if their balance of payments was stronger than the US and its growth gap about to narrow."
Year-end targets for EUR/USD and USD/JPY stand at 1.30 and 105.00 respectively, Normand concludes.