Credit Suisse FX Team Sees Clients Most Bullish On AUD/EUR, Most Bearish On USD
The latest survey conducted by Credit Suisse's FX Sales team confirms our conclusion from reading yesterday's bearish report on the USD from Goldman, namely that the time to buy the dollar is here. Per CS: "Our clients’ most bullish currency views seem to be AUD, EUR and CAD. For the first time since December 2009, our sales force thinks clients have turned net bullish on the euro. Our clients’ top bearish currency views seem to be the USD and NZD. In terms of client flow, our sales team witnessed net buying of EUR and AUD, and net selling of USD and MXN over the past two weeks." We are confident today's CFTC COT report will confirm the recent collapse in speculative EUR bias, indicating that it may well be time to go long the EURUSD, if only for the contrarian play, now that everyone is once again on the other side of the trade, presumably based on the silliest of catalysts, the "stress test" circus.
More from CS:
Our clients’ most bullish currency views seem to be AUD, EUR and CAD. For the first time since December 2009, our sales force thinks clients have turned net bullish on the euro. Although the euro has regained yield support following the expiry of the first 12m LTRO on July 1, we expect the euro to lose ground again vs. the USD and most other G10 currencies in the months ahead (see “FX Strategist – Implications of a smaller EUR”, published 28 June 2010). We are also bullish on the AUD and CAD. The much stronger-than-expected employment reports released in Australia and Canada early this week support our and our clients’ view on this.
Our clients’ top bearish currency views seem to be the USD and NZD (Exhibit 9). We are more neutral on the USD in the near term. Although the USD is likely to remain broadly well supported vs. the EUR and the JPY, we think it would underperform the peripheral currencies, such as AUD and CAD should the risk sell-off subside. We are bullish on the NZD vs. the G3, but see interest rate spread pressure on AUDNZD to rally.
Split views on GBP and JPY. We notice that GBP and JPY are listed by clients as the third and fourth most bullish as well as most bearish currencies In terms of client flow, our sales team witnessed net buying of EUR and AUD, and net selling of the USD and MXN over the past two weeks.
Based on the results from our last survey, an equally weighted basket of long clients’ top bullish currencies (CHF, AUD and GBP) and short clients’ top bearish currencies (EUR, USD and NZD) would have yielded a spot return of 1.61% over the past fortnight. This strategy would have yielded total spot returns of 5.27% year-to-date.