Nomura: These are the six currency trades to finish out the year

by Dramelin 9:00 PM 0 comments

Nomura was already bearish on the dollar against the euro and now it`s adding the yen.
The bank said in a section subtitled "Tweeting weakness" that it expected the greenback was entering its first year of a new, multi-year downtrend.
The main reason was a muddy U.
political picture, it said.
"The recent extension of the debt ceiling and government funding only until the end of the year will keep investors concerned about a possible negative U.
event in coming months," it said, noting the worst-case scenario was for no agreement to be reached before the extension expires in December.
"On top of dealing with the debt ceiling and government funding, the administration and Congress will have to contend with the fall-out from Hurricanes Harvey and Irma, tax reform, [ Deferred Action for Childhood Arrivals], North Korea and possibly the Mueller investigation," it added, with its latter item referring to the probe into possible collusion between Donald Trump`s presidential campaign and Russia.
Nomura noted that lawmakers` dockets will be compressed into only around 30 days through the end of the year.
Nomura said there was another nail in the dollar`s coffin: Yields in Germany and Japan are both around zero, meaning that the downside risk was very limited, unlike in the U.
It said it expected the euro could reach $1.
25 or higher in coming months, while the dollar/yen could fall toward 100 to 105.
The euro was fetching $1.
HK/SIN and the dollar was fetching 110.