Bank of America Global Research discusses its preferred trading bias on G10 into year-end
"We are concerned about risks in the rest of the year that could trigger a market correction. We expect that a weak recovery of the global economy and delays on when a Covid19 vaccine will allow a move back to normality will squeeze long positions in risk assets. We see limits in further macro policy support. For the rest of the year, we are positive on JPY, USD and CHF against EUR, GBP, CAD and SEK," BofA notes.
"Based on these arguments, we went short USDJPY in mid-July via a 3 month USD put /JPY call, to hedge against higher volatility this fall...
We went short GBP/CHF on July 29, spot ref 1.1870, via a 1x2 GBP/CHF 1.1830/1.1400 6mth ratio put spread. We remain bearish GBP/CHF following the recent move lower," BofA adds.