Predictions of NAB (NAtional BAnk of Australia)
Please find attached our FX Roadmap for 2010 which contains our Top FX trade ideas and outlooks for the AUD, NZD, USD, EUR, GBP, CHF, JPY and CNY.
All the best from the currency strategy team
Top FX trades for 2010
AUD/USD to trade at parity
** Buy AUD/USD below 0.9000 or buy a 6m vanilla call option with a strike at 1.0000 for a cost of 0.9%.
AUD to outperform low-yielders
** Buy an equally weighted basket of AUD/EUR and AUD/JPY, targeting 0.6700 and 100.00 respectively.
Expressing our bullish NZD view through the crosses
** Sell AUD/NZD on rallies towards 1.2700, targeting 1.2000.
** Buy NZD/EUR on dips towards 0.4800, targeting a move towards our 2010 year-end forecast of 0.5400.
Fade strength in NZD/USD above 0.8000
** Buy a 6m vanilla NZD/USD put at 0.8000, with a strike at 0.7500. This option carries with it a cost of 3.3%, which can be cheapened to 2.9% by adding a knock-out at 0.8600.
Further JPY gains to be capped by intervention
** Buy USD/JPY at 88.0 or look to build long exposure through options. Using spot ref 88.80, a 6 month plain vanilla USD/JPY 100 call can be purchased for 0.67% whilst a USD/JPY 95/100 call spread costs 0.9%.
** Alternatively, buy a 6m USD/JPY 100 call, sell two units of a 105 call KI 110 and buy a 6m 110 call. This costs just 0.57%, leaving the purchaser long from USD/JPY100 but with the entire profit and premium lost if JPY110 is hit at any time before expiry.
GBP/USD to move higher on ongoing structural USD weakness and post-election GBP strength
** Buy GBP/USD at 1.5725 looking for a move to 1.75 in Q4 2010.
** Whilst a 12m vanilla GBP/USD 1.7500 call costs 2.86% on a spot reference of 1.6300, this can be cheapened substantially with the addition of a 1.5725 KI which brings down the cost to 1.45%.
Allowing for pre-election nerves in EUR/GBP
** Sell EUR/GBP on a move to 0.9500, targeting 0.8500, or using spot ref 0.9040, buy a 12 month 0.9000 EUR put KI 0.95 for just 1.70% of principal.
Profit from continued SNB intervention
** For a ‘jobbing’ environment that is likely to persist in the short-term, buy EUR/CHF on any pullbacks to CHF1.5050/80, taking profits on any subsequent move above 1.5200/1.5240.
Play expected CNY appreciation in H2 2010 by long KRW versus USD
** Sell USD/KRW targeting a fall below 1100. |
