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Bank of America stays bullish on the safe-haven currencies for the rest of 2020 while citing fewer odds of strong economic recovery. Also in their arguments was the likely delay in the coronavirus (COVID-19) vaccine that can weigh on risks.

Key quotes

We expect that a weak recovery of the global economy and delays on when a Covid19 vaccine will allow a move back to normality will squeeze long positions in risk assets. 

 We see limits in further macro policy support. For the rest of the year, we are positive on JPY, USD and CHF against EUR, GBP, CAD and SEK.

Based on these arguments, we went short USDJPY in mid-July via a 3 month USD put /JPY call, to hedge against higher volatility this fall.

Market implications

While the risk-off mood is already at its full steam, such bank reports strengthen traders’ perspective towards the safe-haven currencies.