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Jun 03 - 09:55 AM

G10: Use Bear Market Rallies To Enter Positions In Short AUD/JPY And EUR/JPY - SEB

By eFXdata  —  Jun 03 - 08:39 AM

SEB Research likes selling AUD/JPY and EUR/JPY on rallies.

"So far, we have had an ‘orderly’ sell-off in equities: on the one hand the end game is probably a risk asset capitulation, but we will have to live through bear market rallies. The outlook for global activity momentum remains pessimistic, the surprise may be Chinese economic activity picking up as covid restrictions ease, however, this is unlikely a definitive end to lockdowns in China as Omicron proves more difficult to contain," SEB notes. 

"The US dollar is likely setting a local peak but should remain underpinned at elevated levels as long as the Fed removes liquidity (QT) and with a possibility of risk sentiment capitulation. 

Continued cyclical headwinds and interest rates becoming more sensitive to equities favours expressing a positive view on ‘safe havens’ like JPY and CHF vs cyclical currencies – use bear market rallies to enter positions such as short AUD/JPY and EUR/JPY," SEB adds. 

SEB Research/Market Commentary


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