G10FX: A Pivotal Time For Risk Markets Over Summer; What’s The Trade? – Nomura

Nomura FX Strategy Research notes argues that the coming months over the summer is likely to be pivotal for markets.

"Given that most expect the Fed to announce quantitative tightening in September or October and the ECB to announce its tapering plan in September, rates markets are likely to experience sharp moves in the months before that," Nomura notes.

"On top of that, the summer months typically see the worst performance of risk markets," Nomura argues.

What's the trade? Nomura argues that clearer trades are likely to be the ones that suffer from Fed/ECB balance sheet adjustments and a rotation in growth surprises away from China to the US.

Such trades, according to Nomura, include: buying EUR/NZD, and selling AUD/USD.

In line with this view, Nomura maintains a long EUR/NZD* exposure from 1.5570 targeting 1.6190.

Source: Nomura Securities ResearchOriginal Article