FX Alpha 11 February 2014

What’s the best funding currency?


What’s the best funding currency? Increasing real interest rates could lead to a resurgence in carry trade performance. We ask what is the best funding currency?


G10 Highlights. Inflation Report the key event for GBP. Japanese current account data go unnoticed by investors. Riksbank to stay on hold tomorrow. Be aware of rising inflation in Norway.

FX Metrics. We use correlation forecasts to construct optimized carry trades. Based on this we outline a trade idea on carry trades.

EM Highlights. Central Bank of Russia to refrain from rate increases and isse a rather cautious statement. CEE CPI week.
FX Portfolio Recommendation. We provide a series of thematic and tactical trade sugges-tions across G10 and EM.
Technical Analysis. USD weaker but looking for key supports to hold.

Event calendar. First appearance of new Fed Chairwoman Janet Yellen today. Otherwise, Riksbank rate decision as well as CEE CPIs and GDP data in focus.

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