Intraday Outlooks For EUR/USD - SEB

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Press review

Sergey Golubev, 2015.09.17 12:57

How To Trade The FOMC - Credit Agricole (based on efxnews article)

• "USD longs funded in low yielding currencies like CHF seem still attractive in our view. A Fed hike could boost the USD but may not necessarily trigger a sharp risk selloff. As a result the likes of EUR, CHF and JPY need not receive a massive boost. We like being long USD against CHF in particular because the positive correlation between CHF and risk aversion has been weakening recently."
  
• "If the Fed doesn't hike and signal a lower glide path for Fed fund rates while downgrading its core inflation and unemployment projections, chances are that risk appetite could recover some more. While we could see investors unwinding decoupling trades and USD underperforming, we doubt that this will be sustained as markets will continue to see any decision to keep rates unchanged as delaying the inevitable. Under this scenario, the USD may lose some ground against EUR, CHF and JPY initially but the underperformance should be ultimately capped by the prospects for more policy divergence (eg more ECB QE) and resilient risk appetite. We think that USD/CHF should hold up well as EUR appreciates against both CHF and USD. When it comes to risk-correlated or commodity currencies, we doubt that any of them could regain ground on a sustained basis, given the lingering risks from China and the Fed."
• "GBP could be among the more resilient currencies today especially if the Fed boosts investors’ demand for decoupling trades. Indeed, accelerating wage growth in the UK and increasingly hawkish rhetoric from the BoE has helped GBP regain some ground of late."