HUF: ING Say EURHUF Should Have Easy Path to 402

On Friday, Goldman Sachs recommended going long NOKSEK via 3-month 0.9450/0.9700 call spreads.

• “The Euro and its satellites have appreciated sharply versus the Dollar so far this year, and while we think that Euro strength is warranted, the pace of the moves has resulted in levels across European FX that look somewhat disjointed relative to our model-implied estimates”
• “The clearest dislocations have been in the Scandis, with SEK seeing pronounced outperformance during the March European fiscal re-rating episode, while NOK has underperformed notably since April 2nd”.
• “With the clearest risks to relative NOK strength likely coming from a further deterioration in risk sentiment—both through a deeper path for cuts for the Norges Bank, and through a further sell-off in oil prices—our preference is for NOK/SEK longs given the lower sensitivity to global risk”.
   

UBS estimate that “CTAs have sold $40/50bln worth of global stocks over the last three weeks, with most of the selling happening in the first week and very little in the following two. Technicals might be turning positive, with very bearish sentiment and a strong price rebound last week. We expect CTAs to turn supportive in May, starting with $20/25bln of potential buying over the next two weeks”.

• They also note that “despite the pick-up in bond volatility, CTAs continued to buy back their duration shorts (~$25mln Dv01 done in the last three weeks). While doing so at a slower pace than previously anticipated, the buying should continue, likely benefitting long dated bonds.”
• Elsewhere, UBS calculate that “in credit, CTAs have been selling fast and in size. Current positioning is extremely short, at the 5th percentile of a 20-Year distribution. Like in equities, CTAs are likely to turn supportive in credit, at least tactically”.
• In FX, they suggest that “after a quick pause at the start of the month, CTAs have resumed selling the USD. In the last two weeks, they sold $70/80bln of the greenback, with Asia FX, GBP and CAD being the main beneficiaries. CTA FX Flows should slow down again, with some light profit-taking in G10 FX, and no major flow in EM FX”.
• Finally, in commodities, they suggest that “selling pressure from CTAs is expected to fade, and even reverse in some cohorts, like energy & agriculturals. CTAs remains very long gold & short energy”.

A small broader bid is emerging in the Pound, through its session high against the USD, JPY, and the EUR.

• Small resistance in Cable moves down to 1.3349, but overall moves are fairly contained.