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FOREX: Citi's trade of the week is to sell NZD/JPY at JPY77.18, with a target of
JPY75.00, and a stop loss at JPY78.25.
- Citi reasons that "optimism on a potential trade agreement between the US and
China looks likely to unwind. To the extent that expectation for greater signs
of cooperation between the two powers has helped to fuel strength in risky
assets there may now be danger for a reversal in the run-in to the G20 meeting.
This follows signs of a continued gulf between the US and China evident in
speeches by Vice President Pence and President Xi at the APEC Summit, where
leaders were unable to agree on a statement. More broadly, the dispute between
the US and China is increasingly about geopolitics as opposed to trade
specifically, so it may be more difficult to find common ground. This comes at a
time when the US administration may be forced to lean more heavily on trade
policy given limited freedom on domestic issues. Potential for thin markets
ahead of the US Thanksgiving holiday and propensity for investors to more
broadly unwind exposure approaching the end of the yearn amid recent poor
returns could exacerbate response to any disappointment around trade."
MNI London Bureau | +44 0203-865-3809 |