🌎 30+ NEW AI-picked share strategies for exciting international marketsUnlock Global AI Picks

Stay bullish on dollar; sell EUR/USD rallies - Citi

Published 12/08/2024, 12:02
© Reuters.

© Reuters.

Investing.com - Citi Research has turned increasingly bearish on risk, and recommends selling any EUR/USD rallies.

At 07:00 ET (11:00 GMT), EUR/USD traded 0.1% higher at $1.0926, having dropped around 0.3% over the course of the last week.

The U.S. bank flagged last month that it was turning bearish on risk, citing that volatility tends to mechanically move higher into the U.S. election, as well as concerns that the U.S. was heading into recession. The nonfarm payrolls print accelerated this view as the markets repriced the probability of a hard landing. 

This initially drove safe haven FX to outperform and catalyzed unwinds in crowded carry positions. This past week witnessed a reversal as higher beta FX (AUD, CAD, NOK, NZD) outperformed and lower yielders (JPY, CHF) lagged.

Citi asserts G10 FX will continue trading to risk sentiment. 

“Markets have reached an inflection point where the trading environment has become increasingly tactical and the catalyst focus has shifted from inflation to the labor market and growth,” Citi analysts said, in a note, dated Aug. 12.  

“The latter suggests that U.S. retail sales and initial claims will matter more for the risk backdrop than U.S. CPI next week,” Citi added. “Greater clarity should appear in the coming weeks.”

Citi has revised its Fed call and expects 125 basis points in cuts through the year-end With markets pricing ~100 bps in cuts over this window, this creates asymmetric dovish repricing until further signs of stabilization emerge. 

“Here we stress that dovish repricing on non-linear labor market weakness (USD+) is not the same as dovish repricing on disinflation confirmation (USD-). USD has arguably underperformed during this latest bout of risk-off, but we stay bullish and like selling any EURUSD rallies back towards 1.10.”

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.

 

Which stock should you buy in your very next trade?

With valuations skyrocketing in 2024, many investors are uneasy putting more money into stocks. Unsure where to invest next? Get access to our proven portfolios and discover high-potential opportunities.

In 2024 alone, ProPicks AI identified 2 stocks that surged over 150%, 4 additional stocks that leaped over 30%, and 3 more that climbed over 25%. That's an impressive track record.

With portfolios tailored for Dow stocks, S&P stocks, Tech stocks, and Mid Cap stocks, you can explore various wealth-building strategies.

Unlock ProPicks AI

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.