US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes 
ECB Rate Outlook: Ceasefire Eases Pressure but Hikes Still Expected in 2026 
Japan Inflation Expectations Rise as BOJ Rate Hike Timing Faces Uncertainty 
RBA Raises Interest Rates to 4.35% Amid Rising Inflation Risks and Middle East Tensions 
Bank of America Posts Strong Q4 2024 Results, Shares Rise 
South Korea Central Bank Signals Cautious Policy Amid Inflation and Middle East Tensions 
UBS Projects Mixed Market Outlook for 2025 Amid Trump Policy Uncertainty 
OECD Sees Bank of Japan Raising Interest Rates to 2% by 2027 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
China’s Growth Faces Structural Challenges Amid Doubts Over Data 
A few more central banks tiptoe to the exit 2017 was the year in which more central banks broke ranks. We expect this to continue in 2018. The Fed will hike four times and the BoC two, which supports long positions in USD and CAD.
EUR should benefit from the prospect of the ECB completing QE just as it rallied on the expectation of tapering this year.
We pair EUR vs NZD to neutralize the risk to EURUSD from a further repricing of the Fed. The RBNZ is an unlikely candidate to signal tighter policy as the slowdown in migration intensifies the downturn in housing and argues against a policy response to upside inflation risks from minimum wage increase etc. The 3m window KO halves the premium compared to a digital call.
In Sweden, the prospects of a policy pivot were delayed not derailed this year. EURSEK is currently overshooting cyclicals by over 4% the most since 2010. The rebound in inflation to 2.0% in November reduces the risk of the central bank extending QE again next week (this was 0.3% ppt higher than the Riksbank's estimate), although it could still push back the lift-off point for rates by a quarter to 3Q18 in order to better align itself with the ECB’s extension of QE through September.
Long a 9-mo 1.80 EURNZD digital call with a 3m 1.80 window KO. Paid 17.5% on November 21. Marked at 19.04%.
Long a 6m 9.60 EUR put/SEK call. Paid 57.2bp November 21. Revalued at 52bp.
We advocate deploying shorts in futures contracts of near-month tenors with a view to arresting further potential bearish risks of USDCAD, alternatively, we advocate buying USDCAD 3m risk reversal strikes 1.3440/1.2450 (at spot ref: 1.2068).
