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FX Views from LTI Trade Desk: USD Turbulent Path, Weak GBP, Optimistic AUD

Dear Clients, Below is a short outlook on a few of our favourite FX views from our trade desk here at LTI:

USD – following the recent and extremely positive January nonfarm payrolls number, which caused a dramatic turnaround and resulted in the market pricing in the risks of a higher terminal fed funds rate. This response confirms our belief that the USD’s medium-term downward path might be turbulent. Yet, we anticipate that any such price action (USD strength) will eventually prove transitory. In fact, we think the USD is within the midst of a multi-year bearish trend as portfolio flows move in a more unfavourable direction.

GBP – our outlook on the GBP remains weak as the BoE turns increasingly dovish on their monetary policy. Which causes our positioning to be neutral at present, as we remain open-minded for long options in order for shorts to build for an eventual dovish pivot to be committed to.

AUD – We remain optimistic around AUD, especially paired against the USD. As we now see scope for AUD to rise with the accelerated re-opening of the Chinese economy. Although we keep in mind risks tilted towards an increasing hawkish FED prompting safe-haven USD demand. We like the look of GBP/AUD shorts from current.

That concludes our quick market summary for this week. As CAD and NZD pairs look to be in focus in regards to fundamental releases this week. We wish all clients a fantastic week in and out of the markets.

Regards,

Trading

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