The US GDP number was yet another sign of a global economic recovery and the big question for us FX traders is what trades to put on. The obvious carry-trade is to be long AUD against the JPY, USD or GBP, which are all now low-yielders, and this trade should reflect the increasing risk appetite in the marketplace. The problem with this of course is that the AUD/USD has already rallied 50% from its lows around .60. It’s not exactly cheap is it.
The other approach to take is that the USD may now start to bottom out. The US economy is after all the world’s largest and the market and all the big players are mightily short USD against all-comers. So if the US suddenly comes back into favour, and the global economy is growing again, which currency should one be short against the greenback.
The obvious answer for me is the CHF. The CHF is the typical safe-haven currency and the SNB has been quite successful in holding its value down against the EUR in particular. If we don’t need a safe-haven anymore, and if the USD is to appreciate, and if you don’t want to be exposed to a currency which appreciates when it’s a risk-on market- then the logical trade for me is to buy USD/CHF. And it’s cheap at the moment!