Throughout the first quarter of this year, FX markets finally produced some strong trends and with them also better trading opportunities for investors. The question now is whether these have indeed developed into consensus bets and therefore become more vulnerable to general profit taking. Our visit to the UK last week revealed a high conviction rate amongst macro clients regarding: 1) short GBP; 2) short JPY; 3) long SEK; and 4) the positive outlook for Latam currencies (BRL). While GBP/SEK has rebounded fairly sharply from recent lows (up 3%), the market remains stretched based on deviations from long-term moving averages. Positioning (IMM-data: see page 3 for further details) also confirms speculative accounts are almost record-short GBP and JPY (on a 12 month basis).
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SEB