FX Plays As China’s Gargantuan FX Reserve Pile Shrinks Slowly - SocGen

Shockingly bad Chinese trade data overnight set a slightly risk-off tone to the European market open, after recent strength in commodity currencies, oil prices and equity indices...

The data, which posted a 20.6% y/y fall in exports and a 8% y/y fall in imports, tell a story of slowing global trade growth, more than anything else. There will be scepticism about the ability of the Chinese authorities to revive growth with easier credit and. fiscal policy. Maybe that will temper the rally in non-oil commodities and show up the different dynamics faced by oil and other commodities, Or maybe the market will shrug the data off.

Even if markets do shrug off the Chinese data, I’d rather stick with FX longs in the most oil-sensitive currencies against other resources-sensitive ones, So, long CAD, NOK and RUB, relative to NZD in particular but also BRL at these levels.

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