Good morning all. I trust you all had a great weekend. We had a glorious day here yesterday with not a cloud in the sky. That’s summer in the UK done and dusted for 2014
Last week Credit Agricole stuck with their short EUR/USD call and the position they opened late last year at 1.3780. They mentioned that they saw a slight possibility of ECB action but now that Draghi has “more or less indicated that there is no imminent need for additional policy action.” they can see a scenario where EUR/USD rises to 1.40 or more. This comes from the same analysts that made the trade call. There’s no mention of whether they are changing the trade at all so we’ll assume that they’re holding it as is.
We all like to take apart big bank calls sometimes but I like the way that he is willing to see the risks and potential pitfalls to the trade rather than just hold a blinkered view that once you’re in you’re in. The fundamentals may well bust the trade or they may adjust it, who knows. I’ll try and keep an eye on it to see how they do.
In the meantime, what are your thoughts? Would you adjust the trade to incorporate the new risk or leave it as is?
