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Feb 07 - 12:55 PM

G10: Carry May Prove The Way Forward; Short EUR/USD, EUR/CAD, And Long USD/JPY, EUR/CHF - Danske

By eFXdata  —  Feb 07 - 10:45 AM

Danske Research highlights some of the candidates positions for carry trades in G10 over the coming months.

We still sense that markets in general, including FX markets, are adaptive and extrapolate from the latest data point. Central bank forward guidance has little value for markets currently. The US CPI report next Tuesday could therefore prove the next milestone for markets. Cleveland Fed's Nowcast model points to a rebound in core inflation to 0.5% m/m and consensus to 0.4% m/m - the highest since September. If that turns out right, we expect FX markets to continue on the path of the past couple of days," Danske notes. 

 "Carry may prove the way forward in the current murky trading environment. In particular, since we are headed for quieter period rest of February in terms of big monetary policy events and data releases. Within G10, short EUR/USD and EUR/CAD, long USD/JPY, EUR/CHF and EUR/DKK positions are candidates from a carry-to-risk perspective," Danske adds. 

Danske Research/Market Commentary


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