G10: This Is A Tricky Time In The FX Market – SocGen

What is the outlook for the G-10 currencies?

Here is their view, courtesy of eFXdata:

Societe Generale Research discusses the current tricky conditions in FX markets.

“For the FX market this is a tricky time.  The dollar’s short-covering rally played itself out in Q1 and both bond yield and rate expectations settled into ranges. The US economy powers ahead but the virus is spreading globally, and variants are keeping everyone nervous. EM investors are happy to trade idiosyncratic developments but aren’t ready to invest in the US economic boom becoming more global (or if they are, they can’t see much further than Chinese bonds),” SocGen notes.

“EUR/USD  has corrected, bounced back and now prices in improving vaccination rates followed by faster growth in H2.  We may need to see better hard data to trigger the next leg of the rally.  USD/JPY still tracks US rates like a bloodhound. The best opportunities then, remain in the global growth sensitive developed currencies.  AUD, NZD and CAD are likely to outperform European growth-sensitive currencies (NOK, SEK, CE4), as well as USD, EUR and JPY,” SocGen adds.

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