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20 Dec 2013
Flash: Sell rallies in commodity currencies - Societe Generale
FXstreet.com (Bali) - Rallies in commodity currencies are seen as a selling opportunity, notes Sebastien Galy, FX Strategist at Societe Generale.
Key Quotes
"The commodity boom of the last decade has left commodity producers with overly expensive non-commodity sector and in a few cases in EM a sticky inflation problem."
"Multiple central banks from the RBA, to Norges bank or the Bank of Canada have been busy trying to mitigate this problem by guiding down their currencies."
"As this state of affair is fairly unstable, they have had great ease to influence the market with the AUD leading the way on the downside. In some cases, a deterioration current account balance has helped the cause."
"The bearish AUD view is by now consensus, the bearish CAD one hasn’t reached that stage. Tomorrow’s CPI release could again surprise by the subdued nature of inflation as intense completion in retail and cost cutting pressures do their work."
"The market is likely to repeatedly take advantage of rallies in commodity currencies to put on new shorts, with today's weaker US prints the excuse."
"The new growth model from China, difficulties in switching that model are likely to keep this as a core theme in the coming months."
Key Quotes
"The commodity boom of the last decade has left commodity producers with overly expensive non-commodity sector and in a few cases in EM a sticky inflation problem."
"Multiple central banks from the RBA, to Norges bank or the Bank of Canada have been busy trying to mitigate this problem by guiding down their currencies."
"As this state of affair is fairly unstable, they have had great ease to influence the market with the AUD leading the way on the downside. In some cases, a deterioration current account balance has helped the cause."
"The bearish AUD view is by now consensus, the bearish CAD one hasn’t reached that stage. Tomorrow’s CPI release could again surprise by the subdued nature of inflation as intense completion in retail and cost cutting pressures do their work."
"The market is likely to repeatedly take advantage of rallies in commodity currencies to put on new shorts, with today's weaker US prints the excuse."
"The new growth model from China, difficulties in switching that model are likely to keep this as a core theme in the coming months."