RBS - Key Global Currency Themes This Week: Stay with stronger EUR/USD

Royal Bank of Scotland - "Trading Summary: Stay with stronger EUR/USD as the ECB dithers on easier policy and US data fizzles. With event risk from the BoE Inflation Report now passed, GBP strength can continue. We reaffirm our 1.69 end-Q1 target for GBP/USD, but see increased overshooting risks for the coming month. NOK price action remains constructive, with a move back in line with its traditional drivers ongoing. Further outperformance is likely on a confirmed break of 8.31 in EUR/NOK and 1.06 in NOK/SEK. Also stay long NOK/JPY. Markets have built in a great detail of positive NZD fundamental news, while at the same time under priced some AUD positives, in our view. We favour establishing short USD/CAD exposure, targeting a move to 1.0850 initially. Long AUD/NZD, short NZD/CAD. A benign rates environment suggests that vulnerable EMFX gets more respite this week. Short USD/MXN, USD/KRW."

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