Keep on doing what's working: Long CAD/JPY, Short EUR/GBP, Short USD/CAD, Long NZD/USD

USDCA daily chart

Societe Generale Research highlights some of its preferred trade strategies going into H2.

"If you wanted to short duration and buy credit in the FX market, the first thing you'd do is sell the yen. It's the big winner when credit spreads widen, and the big loser when bond yields rise. And you'd sell it against something that correlates with a credit-friendly world, so we would choose the Canadian dollar. The caveat is that long CAD/JPY has returned almost 10% in the first half of 2021, and was, with hindsight, the top G10 trade for that period. ," SocGen notes.

"Our preference is still to favour currencies of countries where rate hikes come earlier than from the Fed or the ECB. That favours EUR/GBP. EUR/NOK and USD/CAD shorts (chart above), NZD/USD longs," SocGen adds.

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