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10 Jul 2013
Flash: Long USD vs EUR, GBP and JPY - JP Morgan
FXstreet.com (Barcelona) - Long USD versus EUR, GBP and JPY in spot on early Fed tapering versus BoE/ECB forward guidance and BoJ QE, that was the macro trade recommendations put out by Paul Meggyesi, Strategist at JP Morgan, over the weekend.
Forward guidance established by the ECB, according to Meggyesi, "is a potentially significant development for both interest rate differentials and exchange rates." Besides, forward guidance means, in view of the Strategist, "that the outlook for US/European rate differentials has become more asymmetric in favour of the dollar."
Meggyesi believes that while "European rates and currencies are capped even if the regional data continues to improve, US rates and the dollar are not." The JP Morgan Strategist adds "EUR/USD no longer has a short positioning base to support it the way it did when US yields initially surged." Meggyesi recommendations is to sell EUR/USD and wait for the 1.2750 range floor to break -getting very close - "as US data and yields turn up once more" Meggyesi concluded.
Forward guidance established by the ECB, according to Meggyesi, "is a potentially significant development for both interest rate differentials and exchange rates." Besides, forward guidance means, in view of the Strategist, "that the outlook for US/European rate differentials has become more asymmetric in favour of the dollar."
Meggyesi believes that while "European rates and currencies are capped even if the regional data continues to improve, US rates and the dollar are not." The JP Morgan Strategist adds "EUR/USD no longer has a short positioning base to support it the way it did when US yields initially surged." Meggyesi recommendations is to sell EUR/USD and wait for the 1.2750 range floor to break -getting very close - "as US data and yields turn up once more" Meggyesi concluded.