The market has gone short the dollar and euro and long the "obvious beneficiaries of money printing," including AUD, NZD, MXN and CAD, says Kit Juckes at Societe Generale. But at current levels, those currencies are too expensive to add to positions. The next catalyst for a move will have to come from a deterioration in Europe or in the US -- which would likely hit those higher-beta currencies and bring them down to attractive levels. Or it will come from a rebound in the world economy, Juckes says. Regardless of what happens, money isn't likely to retreat to the sidelines, as fund managers haven't made enough return this year to call it a day, which could lead to more volatility as the year winds down, he says.
Tuesday, 25 September 2012
QE Beneficiaries Looking Expensive -SocGen
The market has gone short the dollar and euro and long the "obvious beneficiaries of money printing," including AUD, NZD, MXN and CAD, says Kit Juckes at Societe Generale. But at current levels, those currencies are too expensive to add to positions. The next catalyst for a move will have to come from a deterioration in Europe or in the US -- which would likely hit those higher-beta currencies and bring them down to attractive levels. Or it will come from a rebound in the world economy, Juckes says. Regardless of what happens, money isn't likely to retreat to the sidelines, as fund managers haven't made enough return this year to call it a day, which could lead to more volatility as the year winds down, he says.
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