First appeared on eFXplus on Aug 29 - 11:15 AM
Societe Generale Research prefers selling USD/CHF than buying EUR/USD around current levels.
"EUR/USD is holding up as USD/CNY crawls higher. Mind you, once upon a time we looked at the 10year yield differential as a guide to where EUR/USD goes and the last time that was below 220bp, almost 18 months ago, EUR/USD was well above 1.20,'SocGen notes.
"Rate differentials will become an FX factor again in due course but for now, the grind higher in EUR/CNY represents an unwanted tightening in financial conditions. If you want to buy EUR/USD on rates, you might as well sell USD/CHF instead - the Swiss economy's less sensitive to China," SocGen adds.
Société Générale Research/Market Commentary