UBS sees these trading opportunities in Forex and commodities
has climbed more than 3% since the start of the year, driven mainly by strong US economic data and interest rate cuts in other major economies. However, UBS strategists believe these periods of dollar strength can be used to reduce dollar exposure or to engage in volatility selling strategies to generate income, anticipating likely rate cuts later this year.
"We believe depreciation pressures could mount if markets start to price a deeper Fed rate-cutting cycle. Fears about the size of the US fiscal deficit may also contribute to a weaker greenback over the longer term," they wrote. Among global currencies, the bank has the most preferred stance on the Swiss franc. The currency has depreciated by around 6% against the US dollar year-to-date, with the Swiss National Bank being the first major central bank to cut rates.
UBS expects the SNB to further lower its policy rate to 1.00% from 1.25% following June's rate cut. The franc is known for its safe-haven qualities, offering stability amid political uncertainty in Europe, the United States, and elsewhere.prices to end the year at around $87 per barrel, supported by solid demand and OPEC+ efforts to balance the market. For risk-tolerant investors, selling Brent’s downside price risks could be considered.
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