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2 Apr 2014
Market positioned along two major themes - SocGen
FXStreet (Bali) - Sebastien Galy, FX Strategist at Societe Generale, shares his thoughts on structural positioning, noting the market is positioned along two major themes.
Key Quotes
"The first is a global carry trade into advanced economies that presumes moderate growth and low inflation, and secondly, a retreat from emerging markets as these economies become less competitive, with debt overhang and moderate demand from advanced markets."
"The market will speculate on strong Japanese investments into advanced economies in the next two to three months, reinforced by expectations of BoJ easing."
"European soft core and, increasingly, periphery should benefit as well as the US. The USD position is likely to be less hedged to benefit from a rising USD. FX carry trades such as AUD, ZAR or NZD should see some support from flows from Japanese investors and retail, though that may be somewhat tempered by the negative impact of a rising USD on commodities."
Key Quotes
"The first is a global carry trade into advanced economies that presumes moderate growth and low inflation, and secondly, a retreat from emerging markets as these economies become less competitive, with debt overhang and moderate demand from advanced markets."
"The market will speculate on strong Japanese investments into advanced economies in the next two to three months, reinforced by expectations of BoJ easing."
"European soft core and, increasingly, periphery should benefit as well as the US. The USD position is likely to be less hedged to benefit from a rising USD. FX carry trades such as AUD, ZAR or NZD should see some support from flows from Japanese investors and retail, though that may be somewhat tempered by the negative impact of a rising USD on commodities."