US LNG exports surge but will buyers in China turn up?
UBS outlined four foreign exchange trading strategies in the wake of recent market movements that have seen volatility in FX markets rise to levels not observed since 2022.
The bank noted the opportunities created by these conditions, recommending strategies that involve selling the upside or downside of certain currency pairs without committing to current exchange rates. UBS has decided to avoid USD-based trades for the time being, following a recent sell-off of the dollar.
In the case of the Swiss franc, UBS sees a potential in selling the downside in the EURCHF pair. The CHF has strengthened against a range of currencies over the past week, but EURCHF has remained stable, trading well above 0.9250.
UBS anticipates the pair to maintain its strength amidst uncertainty and potentially rise to 0.94 or 0.95 once there is more clarity on US policy. Therefore, UBS suggests selling the downside at 0.90.
For the euro, the focus is on the EURPLN pair, where UBS proposes selling the upside. The EURPLN has recently moved from below 4.20 to around 4.30, influenced by dovish domestic monetary policy in Poland and the impact of US tariffs on the Polish economy.
Despite these factors, UBS expects the zloty’s weakness to be contained and recommends selling the upside above 4.40 over a one-month horizon. The firm cautions that escalated US-EU trade tensions or a larger-than-anticipated interest rate cut by Poland’s central bank on May 7 could pose risks to this strategy.
Regarding the Canadian dollar, UBS suggests selling the downside in the USDCAD pair. Improved sentiment around US-Canadian trade relations suggests a limited downside from current levels, despite potential sectoral tariffs on the horizon. UBS recommends selling the downside below 1.36 over the next month, expecting the USDCAD to edge higher eventually.
Lastly, UBS addresses the South African rand, recommending selling the downside in both USDZAR and AUDZAR pairs. The rand, which initially weakened with the intensification of the trade war, has seen recovery due to tariff delays and a stable government coalition.
UBS finds current levels attractive for selling the downside in USDZAR from 18.25 and AUDZAR from 11.60 over a one-month horizon. However, the firm anticipates the rand to weaken in the medium term due to a slowing global economy, domestic challenges, and US-South Africa relations.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.