Societé Generale - "A deal can still be made on Cyprus, and that would lead to a relief risk rally. We’d use that to sell the euro, as we see a worrying deterioration in the EU political environment, causing ongoing economic under performance.
(...) We fear another euro area (EA) shock wave this spring, but it will be smaller than last year’s. And the global economy is better equipped to fight it. With monetary policy differentiation increasingly patent, the traditional high-beta G10 currencies can offer resilience to risk-off conditions.
We do not add directional trades just yet as the Cyprus situation is fluid. We look forward to fade any relief euro rally and dollar correction if a Cyprus deal is made. We stay short cable and long AUD, CAD and USD versus short JPY, CHF and EUR, a trade that combines our currency war analysis and bearish EUR/USD views. We are also long USD/JPY, long EUR/NOK via options, and long call USD/MXN funded with a USD/CAD OTM call."