FX Morning Update

The report suggests leveraging high USD correlations through structured FX trades, specifically targeting AUDUSD and EURGBP, while maintaining a bullish outlook on CNH downside ahead of US-China trade talks.

Key Takeaways

• 1.USD remains range-bound despite inflation beats; high implied correlations favor leveraging views via dual digital or KO structures.
• 2.GBP shorts are increasingly difficult due to positioning and rate differentials; the desk prefers expressing weakness via leveraged EURGBP topside calls.
• 3.Optimism surrounding the Trump/Xi meeting and strong fundamentals support USDCNH downside, with a move toward 6.70 expected over coming months.

Table of Contents

• USD: Leveraging USD Correlations Amid "Divided Dollar"
• Buy 2month AUDUSD 0.7350 Digital Call with GBPUSD 1.3850 KO
• GBP: FX Frustration – GBP Shorts Best Expressed Via Leveraged Structures
• Buy 2month EURGBP 0.88 Call with 0.90 EKO
• CNH: Meeting Expectations
• Meme Of The Day:

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