Yesterday BNBP Paribas opted to take partial profit on long USD exposure, closing out its long USD/CHF provision from 0.8044 for a 1.3% gain.
Today, BNP outlines in a note to clients the rationale behind this call and why they remain selectively long USD vs EUR and JPY.
“We expect the Fed’s inflation rhetoric to attract particular attention over the coming weeks given the market’s reaction to the June FOMC announcement. We will pay close attention to any comments made in the run up to the July FOMC meeting, including those of Fed Chair Yellen on 2 July,” BNP argues.
“We do not see a significant pullback in the dollar given that USD positioning is close to flat. However, given the Fed’s cautious message we still prefer to scale back long USD exposure in our trade recommendations portfolio, taking profit on a USDCHF long earlier this week,” BNP adds.
“We remain long USDJPY with a 105.50 target and short EURUSD with a 1.32 target,”BNP advises.