8 Predictions (and Trades):
1. Tapering will happen, and it won’t matter
2. US will take off, and it will matter - buy USD vs $bloc, short 5-year US rates
3. Capital outflows will rise – sell CHF and JPY
4. Political surprises will move to EM – short TRY and BRL ; long CNH volatility
5. Central banks mispriced – long Scandi FX / short Scandi rates
6. Volatility will rise – buy FX volatility
7. Inflation, not deflation will be problem – long UK inflation breakevens, but neutral GBP
8. Europe won’t surprise – long carry via peripherals, reluctantly short EUR/USD.
George Saravelos Head of European FX & Cross-Market Strategy - Deutsche Bank
