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14 Feb 2014
Flash: Cautious in the US Dollar near term - Nomura
FXStreet (Bali) - The US Dollar could remain heavy near term, notes the FX Strategy Team at Nomura.
Key Quotes
"This week we wrote on how the weaker US data, increased uncertainty about the outlook for US monetary policy, a high bar in terms of US growth expectations for 2014, and more stable risk markets, are all factors that could weight on the dollar in the near-term. We are looking to stay more cautious on the dollar in the near-term and we are staying flat for now."
"In the commodity currency de-linkage we found that since late last year, the relationship between commodity currencies and commodity prices has shifted. Currencies, historically highly correlated with commodity prices, such as AUD, CAD and NZD, have begun diverging from their respective commodity price indices. The divergence has been most radical recently for the Canadian dollar and could provide an opportunity should the usual relationship resume. Motivated by the work we also entered short AUD/CAD."
"Finally on GBP, we have been trading the GBP from long side for the past several months. We recommended buying GBP/CHF into Inflation Report on Wednesday and are happy to continue to hold the position following the less dovish inflation report than the market was expecting."
Key Quotes
"This week we wrote on how the weaker US data, increased uncertainty about the outlook for US monetary policy, a high bar in terms of US growth expectations for 2014, and more stable risk markets, are all factors that could weight on the dollar in the near-term. We are looking to stay more cautious on the dollar in the near-term and we are staying flat for now."
"In the commodity currency de-linkage we found that since late last year, the relationship between commodity currencies and commodity prices has shifted. Currencies, historically highly correlated with commodity prices, such as AUD, CAD and NZD, have begun diverging from their respective commodity price indices. The divergence has been most radical recently for the Canadian dollar and could provide an opportunity should the usual relationship resume. Motivated by the work we also entered short AUD/CAD."
"Finally on GBP, we have been trading the GBP from long side for the past several months. We recommended buying GBP/CHF into Inflation Report on Wednesday and are happy to continue to hold the position following the less dovish inflation report than the market was expecting."