By eFXdata — Oct 14 - 01:30 PM
Synopsis:
SocGen identifies a potential opportunity to purchase GBP and AUD against the EUR if the USD experiences upward momentum this week, amid broader concerns regarding the euro's performance.
Key Points:
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EUR Struggles and GBP Vulnerability:
- The euro is facing challenges, which places the GBP in a precarious position. A decline below EUR/USD 1.09 and GBP/USD 1.30 could lead to a significant downturn across the board.
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CFTC Data Insights:
- Recent CFTC data indicates a reduction in dollar shorts or an increase in dollar longs across various currencies, particularly against CAD and CHF. The AUD and MXN were notable exceptions, as longs for these currencies increased.
- The AUD and MXN may require more positive developments from China to maintain their strength, especially following last week's disappointing fiscal policy announcements.
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USD Movement and Market Sentiment:
- If the USD breaks higher this week, SocGen suggests this could be an opportune moment to buy GBP and AUD against the EUR.
- While there may also be a chance to short the USD, market participants may be hesitant to do so ahead of the upcoming US elections, given the current political climate.
Conclusion:
SocGen sees potential for strategic buying of GBP and AUD against the EUR, contingent on whether the USD gains strength this week. The current market dynamics and geopolitical uncertainties are creating a complex environment for currency positioning.
Source:
Société Générale Research/Market Commentary