JPMorgan are wary of 'risk' (shorts on AUD and NZD) and highlight oil concerns ahead
The bank begins with the highlights of last week:
- Directional clarity remained elusive
- two major event risks ... FOMC meeting under a new chairman and a landmark Section 301 trade action
And, ahead (bolding mine):
Portfolio remains light on risk
- slight defensive tilt to navigate protectionism-related uncertainty
- Maintain a modest USD short vs. other reserve currencies like CHF
- keep selective high beta shorts expressed via AUD and NZD versus the Euro
- Oil is re-emerging on macro radars as a potential petro-FX catalyst, stay tactically long NOK/SEK and short EUR/NOK
- CAD is on the watch list as a potential buy given the better tone to NAFTA negotiations
Technical Strategy
- The range bias for the USD indices persists following this week's failure at key resistance.
- The breakdown in USD/JPY reasserts the medium-term downtrend; the backdrop for Antipodeans continues to deteriorate.
Stay long:
- NOK/SEK, USD/HUF, USD/CZK, USD/NOK, JPY/KRW, USD/KRW, USD/CAD and USD/ILS & short PLN/HUF, GBP/CHF, AUD/CHF, USD/CHF and NDZ/USD.
