G10: Likes Short EUR/JPY, Short GBP/JPY, Short GBP/AUD, Long AUD/CAD, Long AUD/NZD – SocGen

As the current financial crisis continues , what is the outlook for the G10 currencies?

Here is their view, courtesy of eFXdata:

Societe Generale Research highlights some of its current trading bias on  G10 currencies.

“The Fed won’t buy at this pace for ever, not even for as long as the current global economic crisis persists, and because the US Treasury is the world’s best credit, it still crowds out less attractive borrowers, especially countries that rely on capital inflows. With their economies suffering, global trade collapsed, export markets in lockdown and investors preserving capital rather than looking for yield, they are going to struggle as much from any rise in longer-dated US yields as from the economic environment,” SocGen notes.

“Staying long the currency of the country which has the strongest net international investment position (Japan) and short those of big borrowers, seems sensible. Pressure on indebted-EM remains, short GBP/JPY is appealing too.

We still like EUR/JPY shorts  as European data comes in weak and the fall-out from the Bundesverfassungsgericht ruling continues. EUR/SEK shorts appeal for the same reason.  And we still like AUD/CAD longs, or GBP/AUD shorts, or AUD/NZD longs,” SocGen adds.