MUFG has 2 trades of the week: targeting long USD/CAD and short EUR/USD

MUFG information via eFX

  • “The broadly favorable outlook for the US Dollar remains in place in our view despite early signs of weaker inflation evident in US CPI data released this week. be corroborated before they can prove meaningful.In the meantime, the Fed will have to persist with hawkish rhetoric given how late it has started to tighten and given that inflation data this week was not Another jobs and CPI report will be released ahead of the September FOMC and so we can ‘I’m not ruling out yet another 75 basis point rate hike,’ notes MUFG .
  • “We expect the yield curve in years 2 to 10 to invert further and the extent of yield curve inversion in the past has been a significant factor in the performance of the dollar. With risks overall still negative, especially in Europe, it remains very likely that the US dollar will strengthen further,” adds MUFG.

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