More from FXstreet.com

Forex Flash: Global reallocation of capital underway; Potential for 1.35 on EUR/USD - Societe Generale

By FXstreet.com,  January 15, 2013, 05:49:00 PM EDT

FXstreet.com (Barcelona) - FX implied volatilities are on the rise from ultra low levels, says Societe Generale FX strategist Sébastien Galy, which he believes "is an important sign not of impending doom, but of a global reallocation of capital."

Mr. Galy expands: "Old regimes are dying and FX is the first sign of this process. We are seeing this in JPY, are starting to see this in CHF and will eventually see it happen in USD, hopefully in H2 or Q4 as the US economy steadily recovers."

As capital flows make its way out of low-risk profile territories, "the allocation between bonds and equities as ultimate 'domestic' claims to global growth will eventually also become more unstable" the analyst notes. For now, "these wobbles will be crushed as monetary policy remains very expansive globally, but the process started. FX is the warning sign" Sébastien concludes.

Societe Generale is presently long EUR/NZD, suggesting to buy EUR/GBP on dips, they like EUR/CHF long side and as Sébastien states, "wouldn't be surprised to see EURUSD steadily grind in the direction of 1.35."




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Forex and Currencies

Referenced Stocks:



Latest News Video

LEGO Model Features Queen Elizabeth II Wearing Diamond Crown
LEGO Model Features Queen Elizabeth...
Greece's 'Plan B'
Greece's 'Plan B'                   
The Future Ethiopia Only Dreamed of
The Future Ethiopia Only Dreamed of
Family of Missing Woman Won't Give Up Hope
Family of Missing Woman Won't Give ...


Sign-in
Existing NASDAQ.com member? Log in here.

By signing into to the site using any of the third-party services above, you agree to NASDAQ.com's Terms of Use.

From Our Trusted News Source





Most Active by Volume:

Company Last Sale Change Net / %
BAC $ 13.43 0.07  0.52%
CSCO $ 24.24 0.35  1.48%
MSFT $ 34.87 0.79  2.32%
F $ 15.08 0.44  3.01%
ARUN $ 13.10 4.51  25.61%
SIRI $ 3.50 0.05  1.45%
GE $ 23.46 0.19  0.82%
S $ 7.32 0.04  0.55%