SocGen likes the US dollar but not against the euro
From Kit Jukes at Soc Gen:
"10-year real yield differentials point to a range-bound EUR/USD.
Today's industrial production data are weak (-1.3% m/m in Germany) but I'm not sure that tells us anything new. Amid the volatility, the underlying trend is running at around 1% per annum, while at a Eurozone level, it's running at around 1 1%, though showing signs of losing momentum. No reason there to buy the Euro, nut no new news either.
Oil has dropped back in its recent range. The question overall for FX is whether the softer tone to commodities and the more stable dollar will start to eat away at confidence in emerging market and commodity-sensitive currencies generally.
We continue to err on the side of slowly rebuilding long dollar positions - so far, sort NZD/USD and short GBP/USD.
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