What is the outlook for the non-USD crosses?
Here is their view, courtesy of eFXdata:
Citi Research flags a scope for further weakness in the commodity bloc (AUD, NZD, CAD) against (JPY, CHF, EUR).
“AUD & CAD, NZD are likely to weaken on non-USD crosses (Safe Havens, Euro bloc),” Citi notes.
“JPY, Gold, CHF & now EUR – Common to JPY, CHF and EUR is the expectation that neither of these central banks (ECB, BoJ and SNB) will cut rates further and are only likely engage in targeted liquidity provisions instead. This adds to the safe haven status with Yen also benefitting from the drop in Japan pension fund selling of Yen, and EUR and CHF supported by the unwinding of EUR and CHF – funded carry trades. Finally, the “low for longer” rates theme continues to benefit Gold,’ Citi adds.
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