Next year’s forecasts and trades are rolling off
Danske is out with their top trades for 2019
1.Short EUR/NOK
- A fundamentally compelling case is building for shorting EUR/NOK
- Growth, carry, valuation, seasonality and positioning suggest a lower cross
- Given year-end seasonality, we prefer to express our view via options
2.Long NOK/SEK
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We recommend buying the NOK/SEK spot outright for a move towards 1.1400.
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Relative growth, monetary policy, carry and positioning are set to support cross
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Position embeds implicit hedge to EUR and year-end seasonality
3.Long USD vs funding basket
- Respect the carry!Long USD versus a well-diversified basket (JPY, SEK, CHF)
- Fed is under-priced and should not hesitate to add further to USD carry
- JPY, SEK, CHF provide a funding basket that insulates from risk sell-offs
4.Long EUR/USD
- Carry is a headwind but valuation suggests next big move in EUR/USD is higher
- USD support from cyclical divide, tariffs and ECB-Fed divide to fade in 6-12M
- We suggest buying a 9M EUR/USD call financed by a sold 3M straddle
5.Short EUR/GBP
- We expect a ‘decent Brexit’ and target EUR/GBP at 0.83 in this scenario
- But the path towards Brexit will most likely be prolonged and uneven
- We suggest to position for GBP appreciation via a 1M 3M put calendar spread
6.Short NZD/CAD
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We look for a rebound in the oil price, which should send NZD/CAD lower
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The OPEC meeting on 6 December could mark a turning point for the oil market
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We recommend a short NZD/CAD spot position for a move towards 0.83
7.Short EUR/HUF
- We suggest to sell EUR/HUF spot to benefit from expected drop and a small carry
- MNB set to become markedly more hawkish and hike early 2019 as inflation rises
- While political risks remain for HUF, MNB is crucially set to move before ECB
Morgan Stanley had some of their views for 2019 out a week or so ago. You can find more bank notes and analysis on our research page.
Psychedelic chartist extraordinaire. Have your shades ready.
Philosophy: “Don’t be a Dick for a tick”
Read how Ryan got into trading here
Philosophy: “Don’t be a Dick for a tick”
Read how Ryan got into trading here
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