BNPP 2015 Top Trades: Sell EUR/USD

BNPP 2015 Top Trades: Sell EUR/USD Targeting 1.15
09 Dec 2014 14:48 EDT
By eFXnews.com
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BNP Paribas is out with its top FX trades for 2015. Over the coming days, we will cover a selection of these top trades especially within the domain of major currencies. Starting today with BNPP's first trade on the top of the list:

Trade#1: Sell UR/USD Targeting 1.15.

Rationale:

1- The theme of policy divergence that drove EURUSD lower in 2014 should persist in 2015 as the start of the Fed’s policy tightening in June contrasts with an ongoing balance sheet expansion by the ECB.

2- We expect real rate differentials to remain a useful framework for capturing the FX impact of both conventional and unconventional central bank policies. Specifically, we think that higher US nominal rates and higher Eurozone inflation expectations will do most of the heavy lifting in moving the real rate differential against the EUR and in favour of the USD. Our rates strategists’ forecasts imply a widening of 2y nominal rate differentials by 125bp.

3- If the ECB is successful at pushing eurozone inflation expectations higher, real rates should move even more (closer to 200bp), suggesting that the risk is for an even weaker EURUSD than we are currently forecasting.

BNPP 2015 Top Trades: Sell EUR/USD Targeting 1.15
09 Dec 2014 14:48 EDT
By eFXnews.com
Share on print Print Share on email Email

BNP Paribas is out with its top FX trades for 2015. Over the coming days, we will cover a selection of these top trades especially within the domain of major currencies. Starting today with BNPP's first trade on the top of the list:

Trade#1: Sell UR/USD Targeting 1.15.

Rationale:

1- The theme of policy divergence that drove EURUSD lower in 2014 should persist in 2015 as the start of the Fed’s policy tightening in June contrasts with an ongoing balance sheet expansion by the ECB.

2- We expect real rate differentials to remain a useful framework for capturing the FX impact of both conventional and unconventional central bank policies. Specifically, we think that higher US nominal rates and higher Eurozone inflation expectations will do most of the heavy lifting in moving the real rate differential against the EUR and in favour of the USD. Our rates strategists’ forecasts imply a widening of 2y nominal rate differentials by 125bp.

3- If the ECB is successful at pushing eurozone inflation expectations higher, real rates should move even more (closer to 200bp), suggesting that the risk is for an even weaker EURUSD than we are currently forecasting.

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BNPP 2015 Top Trades: Sell EUR/USD Targeting 1.1509 Dec 2014 14:48 EDTBy eFXnews.comShare on print Print Share on email EmailBNP Paribas is out with its top FX trades for 2015. Over the coming days, we will cover a selection of these top trades especially within the domain of major currencies. Starting today with BNPP's first trade on the top of the list:Trade#1: Sell UR/USD Targeting 1.15.Rationale:1- The theme of policy divergence that drove EURUSD lower in 2014 should persist in 2015 as the start of the Fed’s policy tightening in June contrasts with an ongoing balance sheet expansion by the ECB.2- We expect real rate differentials to remain a useful framework for capturing the FX impact of both conventional and unconventional central bank policies. Specifically, we think that higher US nominal rates and higher Eurozone inflation expectations will do most of the heavy lifting in moving the real rate differential against the EUR and in favour of the USD. Our rates strategists’ forecasts imply a widening of 2y nominal rate differentials by 125bp. 3- If the ECB is successful at pushing eurozone inflation expectations higher, real rates should move even more (closer to 200bp), suggesting that the risk is for an even weaker EURUSD than we are currently forecasting.

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Hasil (Bahasa Indonesia) 2:[Salinan]

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