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Nov 14 - 02:55 PM

USD: Two Weeks To Unwind A Year In Macro; What's Next? What's The Trade? - TD

By eFXdata  —  Nov 14 - 01:20 PM

TD Research reduced its USD bullish conviction bias and sees a room for consolidation in the near-term. TD likes short GBP/CHF exposure in the short-term.

"The market has tried to unwind stagflation hedges in two weeks. There is some merit to the repricing, reflecting the reduced tail risks related to global growth, inflation, and Fed terminal rate pricing. Europe's mild fall weather and improved terms of trade has boosted growth expectations, though again coming from very low levels. The softer than expected inflation was welcomed news. That said, the USD move likely reflects a reduction of extreme positioning and risk premium rather than a fundamental reboot," TD notes. 

"We have reduced our conviction levels on long USD exposure, downgrading from max bullish a few weeks ago. That said, we don't see the fundamental support to merit the start a true reversal just yet. As a result, the USD should consolidate some of its losses in the weeks ahead. We like downside in GBP but prefer to play against CHF in the short-term (MXN and BRL attractive crosses as well)," TD adds. 

Source:
TD Bank Research/Market Commentary

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