Forex Investment and Currency Trading

Long NOK/SEK (half unit)

• Entry (19 June) : 1.1690
• Current: 1.1690
• Target: 1.1900
• Stop Loss: 1.1460

Norwegian interest rate markets currently significantly underestimate the potential for Norges Bank rate hikes and slightly over-estimate the risk of Riksbank hikes. The favoured strategy year-to-date has been
to be long all of the peripheral Europeans vs the core, but traders are now turning outright bearish SEK, but remain bullish NOK. Enter a long NOK/SEK position at spot (1.1690) on June 19. Given the choppy nature of recent price action, enter this trade in an initial half unit, with a wider-thannormal stop at 1.1460, just below the six month low. Add a second half unit on a break above 1.1900.

Trades Under Consideration
Long USD vs JPY and NZD: USD is supported by ongoing central bank rhetoric from both within and outside the US. This basket exploits JPY’s role as “path of least resistance” for USD strength and a  generally negative NZD view, while remaining roughly neutral to risk aversion. USD strength is likely to remain a “live” issue in markets at least until the early-July G8 central bankers meeting. With USD/JPY currently just below the top of the recent trading range (108.58) and NZD/USD above the base of its respective range (0.7449), wait for breakout from one or other as a signal to enter this trade.