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Hardy: My essential forex trades for Q1

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Saxo Bank’s Head of FX Strategy, John Hardy outlines two possible trade ideas for the upcoming quarter.

In December the Swiss National Bank instituted negative rates on sight deposits above 10 million Swiss Francs. If the European Central Bank does embark on a quantitative easing programme in the first part of 2015, the Swiss National Bank could be under pressure to extend its policy on negative sight deposit rates. This has created potential for traders looking to go long on the dips in USDCHF.

Additionally, John is looking to short CNH, the off-shore version of the Chinese renminbi.  With the Chinese economy on the verge of a credit bubble and deflation, John believes that the country is looking to import inflation. The best way to do this would be through a devaluation of its currency, similar to the Bank of Japans past actions. This devaluation of the CNH will be a key trade for 2015.