Citi Research Turns Bearish on Risk, Recommends Selling Rallies: Market Update
In the world of finance, Citi Research has taken a cautious stance on risk, advising investors to sell any market rallies. The EUR/USD pair saw a slight increase of 0.1% to $1.0926 at 07:00 ET (11:00 GMT), following a 0.3% drop over the past week.
The U.S. bank recently expressed concerns about increasing volatility leading up to the U.S. election and the possibility of a recession in the country. The latest nonfarm payrolls report reinforced these worries, causing markets to reassess the likelihood of a sharp economic slowdown.
Initially, safe-haven currencies outperformed, while higher-risk currencies like the Australian, Canadian, Norwegian, and New Zealand dollars gained ground, and lower-yielding currencies such as the Japanese Yen and Swiss Franc lagged behind.
Citi analysts believe that G10 currencies will continue to be influenced by market sentiment in the near future. They emphasize the importance of factors like U.S. retail sales and initial jobless claims in determining the market's risk appetite.
Furthermore, Citi has adjusted its forecast for Federal Reserve interest rate cuts, predicting a total of 125 basis points by the end of the year. This contrasts with the market's expectation of around 100 basis points in cuts, suggesting a more dovish outlook until signs of stability emerge.
In conclusion, despite some recent weakness in the U.S. dollar during periods of market uncertainty, Citi remains positive on the currency's prospects. They recommend selling any rallies in the EUR/USD pair back towards the 1.10 level.
Analysis: Citi Research's bearish outlook on risk suggests that investors should exercise caution in the current market environment. By closely monitoring key economic indicators and adjusting investment strategies accordingly, individuals can better navigate the potential challenges and opportunities presented by the evolving financial landscape.