JPMorgan Booking Profits On U.S. Dollar, But Bullish Over Medium-Term

Sally Auld, interest rate strategist at JPMorgan Chase & Co. JPM, was on CNBC Monday to discuss the short-term and medium-term outlook of the U.S. dollar. She also shared currency trades that are currently looking attractive and her view on the Chinese economy.

View On The Dollar

“We are very prepared over the medium-term to remain long [on] U.S. dollars, because we think that there is notable divergence between the monetary policy that’s been run in the U.S. relative to, say, other parts of the G4 such as Europe and Japan," Auld said.

“But short-term, we feel that there is a probably more bias towards a correction in the U.S. dollar, simply because of the positioning and simply because also when we compare the U.S. dollar to rate differentials.”

She continued, “So, U.S. rates versus the rest of the world, but [the] dollar looks very, very rich. So, in our macro portfolio, we actually think that given that a number of other central banks globally have come into play in the last couple of weeks. It makes more sense to take profit on U.S. dollar longs against say kiwi, against euro, against yen, and perhaps start thinking about some other cross-market trades.”

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Current Attractive Trades

“So, [the] sort of things we like are being short commodity currencies. So, for example, we are long euro, this is Aussie. We are long dollars versus CAD, and we are short kiwi versus yen,” Auld said.

View On China?

"Our view on China is that in aggregate in 2015, China should record growth somewhere in the lower sevens. What we expect for the current quarter, Q1? To be the weakest quarter,” Auld added.