TD Research discusses its latest take on the preferred G10 tactical strategies.
"The most logical response lies in the fact that supply shocks generally don't end well for the global economy. The hawkish cut from the Fed was, too, a notable driver, especially as our tracking of global central banks show 30% easing rates in the past six months. We still prefer fading EURUSD, mainly as it trades close to HFFV. It should make a fresh break below 1.10," TD notes.
"Another major theme to consider is whether to follow short-term momentum or value strategies. Our HFFV signal shows that the likes of NZD (and to a lesser degree CHF, CAD, and AUD) trade at discounts. NZD has been the weakest performer over the past month while GBP has rallied 3%. Ahead of the RBNZ and into next week, the fade trade is to sell GBPNZD, and the value trade is to buy CHFJPY,' TD adds.