FX Weekly 07:41 CET

21 February 2025

C https://research.ca-cib.com

A “Merz-i” from the EUR?

 This weekend’s German federal election could prove to be one of the
most consequential in recent history, even though FX options seem to Valentin Marinov
rule out any eventual spurt of extra EUR volatility stemming from the Head of G10 FX Strategy
event at Monday’s open. Far-reaching consequences indeed loom, +44 20 7214 5289
especially due to the dire state of the economy that warrants urgent and valentin.marinov@ca-cib.com

decisive government policies. In addition, the strong polling of the anti-

EU AfD has become an important FX risk ahead of the vote, given that David Forrester
the party could emerge as a kingmaker in the new Bundestag and Senior FX Strategist
complicate/slow down the building of a governing coalition. +65 6439 9826
david.forrester@ca-cib.com

 Ahead of the election, the opinion polls continue to suggest that the Alexandre Dolci
CDU/CSU could emerge as the largest party in the Bundestag. FX Strategist
Subsequently, the CDU leader Friedrich Merz is expected to become +44 20 7214 5064
Germany’s next Chancellor in charge of a mainstream coalition alexandre.dolci@ca-cib.com
government of the CDU/CSU and the SPD or the Greens, or both. Such
outcomes would likely see the EUR recouping some ground, with
EUR/USD eventually aiming towards December’s peak of above 1.06, as
it would tame the market fears of a better showing by the AfD in our view.

 In contrast, we think that the worst outcome for the EUR would be
evidence of significantly stronger support for the AfD than implied by
current polls. This could complicate any attempts to build a coalition
government consisting of mainstream parties and push EUR/USD back
to recent lows around 1.03. Last but not least, evidence that both the
CDU/CSU fared worse than expected and the left-wing parties could
boost expectations of a potential centre-left coalition that could be seen
as EUR-positive thanks to the prospects of more aggressive fiscal policy.

 Aside from that, geopolitics could remain centre stage, as any eventual
progress towards a resolution in the Ukraine-Russia conflict may not
boost the EUR much if the EU is left playing second fiddle. Meanwhile,
any further signs of improvements in February’s Eurozone flash PMIs
and Monday’s German IFO may be needed to lift the mood.

 Elsewhere, confirmation of a US slowdown (in the second GDP print for

Q424 Thursday) could leave the USD trailing the G10 FX space this
month. On the other end of the spectrum, the SEK remains an unlikely
outperformer, although in our view this sudden resurgence still looks too
fragile to crystalise a stronger SEK in our forecasts; as a result, we went Latest Publications
long NOK/SEK yesterday.
19 February – FX Risk Index: Risk
surprisingly resilient
Germany’s opinion polls Five-day performance (vs USD)
18 February – FX Focus: SEK: somewhat
% JPY stockier
30 NZD 17 February – FAST FX Model: Still
buying USD/CAD
AUD
20
17 February – FX Positioning Update:
GBP Unwinding of USD and JPY longs
SEK continues
10 NOK G10 FX Forecasts
CHF Mar-25 Jun-25 Sep-25 Dec-25
0 CAD EUR/USD 1.05 1.04 1.05 1.07
Jul-24 Sep-24 Nov-24 Jan-25 USD/JPY 150 148 146 148
CDU/CSU SPD EUR
GBP/USD 1.26 1.25 1.28 1.30
Greens Linke
0 0.5 1 1.5 Source: Bloomberg, Crédit Agricole CIB
AfD BSW

Source: Crédit Agricole CIB, Walrecht.de Source: Crédit Agricole CIB, Bloomberg

1
FX Weekly 21 February 2025 (07:41 CET)

FX and gold outlook

We have downgraded our EUR/USD outlook in the wake of the US election but believe that many negatives are
already in the price and the pair is starting to look oversold and undervalued. In that, we note that our economists
do not expect a recession in the Eurozone and further pencil in a terminal ECB rate of 2.25%, ie, well above current
European rate market expectations. Furthermore, while political developments in France and Germany have rattled
EUR investors in recent months, our rate strategists are not positioned for a repeat of the sovereign debt crisis from
ten years ago and think that many negatives are already priced in. Last but not least, we think that a potential
reduction and even a withdrawal of the US support for Ukraine under President Donald Trump should ultimately
precipitate the end of the war in 2025. In turn, this could usher in a period of easing geological risks in Europe that
could boost domestic demand in the Eurozone. Furthermore, an end to the Ukraine war could lead to a
reconstruction boom in the country that could act as a tailwind for recovery in the Eurozone as well.
The USD rallied after Donald Trump’s victory at the US presidential elections and the ‘red wave’ in the US congress.
The second Trump administration is expected to implement additional fiscal stimulus and more assertive trade
policies that could boost the US growth outlook relative to that of its trading partners and render US inflation stickier.
We further expect that the Trump policy mix could cut short the Fed easing cycle but also think that this has already
been discounted by the rates markets and given a boost to the USD rate appeal across the board. More broadly,
we think that many positives are already in the price of the USD and expect it to remain close to recent highs but
not exceed them on a sustained basis throughout 2025. Furthermore, while we cannot exclude further USD gains
on the back of US tariffs, their timing and aggressiveness remain quite uncertain. In the long term, we also believe
that a return of President Trump’s ‘Weak USD Doctrine’ and market fears about the Fed’s independence could
weigh on the USD once again as we head into 2026.
Growing Eurozone struggles have fed safe-haven bids for the CHF which could remain in demand until
uncertainties are largely cleared off the table. Assuming no lingering shock, the CHF could then return as a favoured
funding currency thanks to the potential return of near-zero interest rates and lofty CHF valuation, while the SNB
should keep a close eye on FX developments and Swiss disinflation.
Among the G10 currencies, the JPY was among the least sensitive to tariffs during Trump’s first term. We expect
the US-Japan rates spread to continue grinding lower as the Fed cuts and the BoJ hikes rates further. This US-
Japan spread compression will reduce the carry appeal of being long USD/JPY alongside the exchange rate’s
volatility remaining elevated due to uncertainty about the rate paths of the Fed and BoJ as well as Trump’s policy
agenda, especially his trade agenda. Japan’s MoF will also remain willing to intervene to support the JPY.
The recent fall from grace of the GBP seems to reflect returning fears about the UK economic outlook that, coupled
with soaring government borrowing cost, could mean that the Labour government could overshoot its current fiscal
deficit target and thus necessitate fresh austerity measures as soon as March. That being said, we would not go
as far as to say that FX investors no longer view the GBP as a higher-yielding, safe-haven proxy for the EUR. In
particular, we continue to expect that political stability and relative economic outperformance of the UK relative to
the Eurozone should continue to fuel market expectations that the BoE would need a less aggressive easing cycle
than the ECB to prop up growth. All this continues to make us constructive on the GBP vs the EUR for 2025 and
2026. GBP/USD could continue to trade close to its lows reached in the wake of the US election but we expect a
more vigorous recovery for the pair than in the case of EUR/USD for 2026.
Trump’s tariff threats have sent USD/CAD to fresh highs above 1.45, but irrespective of the policy stance of the
new US administration, risks to the CAD still seem tilted to the downside in early 2025 on the back of a potentially
wider BoC-Fed gap. Then, prospects of relative growth outperformance by Canada over the US could help the
CAD make a gradual recovery.
AUD/USD was weaker during Trump’s first term due to his China tariffs as well as a falling Australian-US rates
differential. We expect Trump to be open to negotiations on his China tariffs and that they will turn out to be less
than the 60% he pledged during his campaign, which will support AUD/USD. Also supporting AUD/USD will be the
RBA remaining less dovish than many other G10 central banks.
A falling NZ-US rate differential, China tariffs and several spells of dry weather in NZ weighed on NZD/USD during
Trump’s first term. We believe Trump’s China tariffs could turn out to be lower than the 60% he pledged during his
election campaign, which will support NZD/USD along with a stable NZ-US rate differential as the RBNZ matches
Fed rate cuts in the coming year. La Nina and a rebound in NZ growth will support NZD/USD.

Norway’s compelling fundamentals, a hawkish Norges Bank and persistent undervaluation could make the NOK a
favourite long in 2025, assuming global risk appetite remains resilient. The involvement of the Norges Bank’s in FX
spot markets in 2025 may somewhat decide how much leeway the NOK will have too.

The SEK could increasingly dissociate itself from the EUR woes if the Swedish economy is to finally turn the corner
of recession years, thanks in part to faster transmission channels of monetary policy. The eventual return of a rate
premium over the EUR could also give the SEK a competitive edge, alongside a sounder budget/debt stance.

We mark-to-market our XAU forecasts but retain our downward sloping forecast path for most of 2025. We expect
potential renewed gold strength into 2026 on the back of growing market fears about Fed independence and a
fiscal dominance threat in the US.

2
FX Weekly 21 February 2025 (07:41 CET)

G10 FX Portfolio
See below our model portfolio. A percentage representation of the positions’
performance is applied for both FX spot and options trade ideas. A cap on
individual position loss of 2% of notional is used. Other aspects of the performance
calculation including position size, total overall position loss and cumulative
portfolio performance are adjusted accordingly. Please see Our FX portfolio:
performance of the past, adjustment for the future for further details. Please note
that our G10 FX portfolio combines discretionary and systematically motivated
trades, with the same risk management applied. For details on our systematic
approach please see our FAST FX and Month-end Rebalancing Model fact sheets.
Open Spot Trades
Date Time Entry Recommendation Target Stop Last P&L
20/02/2025 16:00 GMT 0.9585 Long NOK/SEK 1.0000 0.9378 0.9578 -0.07%
Open Options Trades
Date Time Option cost ** Recommendation Strike Spot ref Expiry P&L*
Closed Spot Trades
Open date Time Entry Recommendation Close date Close time Exit level P&L
19/08/2024 09:20 BST 1.1051 Short EUR/USD 01/11/2024 12:37 GMT 1.0900 1.63%
22/07/2024 14:40 BST 11.9550 Short EUR/NOK 09/09/2024 08:15 BST 11.9000 0.48%
26/07/2024 12:03 BST 1.9624 Short GBP/AUD 05/09/2024 07:00 BST 2.0000 -2.01%
Closed Options Trades
Date Time Option cost ** Recommendation Strike Spot ref Expiry P&L*
27/02/2024 07:45 GMT 1.35% Long EUR/JPY 6M Put Spread 160/153 163.35 28/08/2024 2.23%
FAST FX (tactical) Portfolio***
Open Spot Trades
Date Time Entry Recommendation Target Stop Loss Last P&L
17/02/2025 09:00 GMT 1.4191 Buy USD/CAD 1.4420 -1.79% 1.4179 -0.07%
Closed Spot Trades
Open date Time Entry Recommendation Close date Close time Exit level P&L
10/02/2025 09:00 GMT 1.4336 Buy USD/CAD 14/02/2025 22:00 GMT 1.4182 -1.14%
03/02/2025 09:00 GMT 1.0246 Buy EUR/USD 1.0493 -2.25% 1.0375 1.10%
20/01/2025 09:00 GMT 1.0309 Buy EUR/USD 1.0489 1.0137 1.0452 1.64%
20/01/2025 09:00 GMT 0.6210 Buy AUD/USD 0.6306 0.6093 0.6306 1.64%
20/01/2025 09:00 GMT 0.5610 Buy NZD/USD 23/01/2025 22:00 GMT 0.5679 1.27%
13/01/2025 09:00 GMT 0.6148 Buy AUD/USD 17/01/2025 22:00 GMT 0.6193 0.86%
06/01/2025 09:00 GMT 1.0348 Buy EUR/USD 10/01/2025 22:00 GMT 1.0244 -1.27%
09/12/2024 09:00 GMT 0.6435 Buy AUD/USD 13/12/2024 22:00 GMT 0.6362 -0.97%
09/12/2024 09:00 GMT 1.4148 Sell USD/CAD 13/12/2024 22:00 GMT 1.4234 -0.94%
18/11/2024 09:00 GMT 1.0547 Buy EUR/USD 22/11/2024 22:00 GMT 1.0418 -1.31%
18/11/2024 09:00 GMT 1.4100 Sell USD/CAD 22/11/2024 22:00 BST 1.3978 1.24%
18/11/2024 09:00 GMT 0.8359 Sell EUR/GBP 22/11/2024 22:00 BST 0.8313 1.00%
G10 FX PIX 2.0 (tactical) Portfolio***
Open Spot Trades
Date Time Entry Recommendation Target Stop Loss Last P&L
Closed Spot Trade
Open date Time Entry Recommendation Close date Close time Exit level P&L
Month-end Rebalancing Model (tactical) Portfolio***
Open Spot Trades
Date Time Entry Recommendation Target Stop Loss Last P&L
Closed Spot Trades
Open date Time Entry Recommendation Close date Close time Exit level P&L
28/01/2025 08:00 GMT - Short USD vs basket 31/01/2025 17:00 GMT - -0.20%
26/11/2024 08:00 GMT 1.0476 / 0.8350 Long EUR vs basket 45625.00 17:00 BST 1.0546 / 0.8307 0.07%
Portfolio Performance
Return on open trades -0.14%
Return on closed trades (YTD) 3.90%
Hit ratio (YTD) 62.50%
Total return (2024+YTD) 3.75%
*Returns calculated as %VaR with 2% risk allocation per trade
**Cost is a percentage of the notional value traded

Source all tables: Crédit Agricole CIB

3
FX Weekly 21 February 2025 (07:41 CET)

FX Portfolio in 2023-25
Closed Spot Trades
Open date Time Entry Recommendation Close date Close time Exit level P&L
05/02/2024 08:50 GMT 1.0722 Long AUD/NZD 16/05/2024 16:15 BST 1.0910 1.78%
Closed Options Trades
Open date Time Option cost ** Recommendation Close date Close time Strike P&L*
Closed FAST FX Spot Trades
Open date Time Entry Recommendation Close date Close time Exit level P&L
18/11/2024 09:00 GMT 0.6455 Buy AUD/USD 22/11/2024 22:00 BST 0.6501 0.56%
04/11/2024 09:00 GMT 0.8403 Sell EUR/GBP 08/11/2024 22:00 GMT 0.8297 2.82%
30/09/2024 09:00 BST 142.38 Buy USD/JPY 03/10/2024 01:17 BST 146.6634 1.67%
23/09/2024 09:00 BST 159.5200 Sell EUR/JPY 27/09/2024 22:00 BST 158.7900 0.24%
05/08/2024 09:00 BST 11.5697 Buy EUR/SEK 09/08/2024 22:00 BST 11.4838 -0.76%
05/08/2024 09:00 BST 0.6449 Buy AUD/USD 09/08/2024 22:00 BST 0.6578 1.93%
05/08/2024 09:00 BST 0.5924 Buy NZD/USD 09/08/2024 22:00 BST 0.6001 1.20%
29/07/2024 09:00 BST 0.8452 Buy EUR/GBP 02/08/2024 22:00 BST 0.8520 2.10%
29/07/2024 09:00 BST 0.6543 Buy AUD/USD 02/08/2024 22:00 BST 0.6511 -0.46%
29/07/2024 09:00 BST 0.5880 Buy NZD/USD 02/08/2024 22:00 BST 0.5958 1.21%
22/07/2024 09:00 BST 0.8423 Buy EUR/GBP 26/07/2024 22:00 BST 0.8437 0.37%
22/07/2024 09:00 BST 1.3745 Sell USD/CAD 26/07/2024 22:00 BST 1.3836 -1.46%
15/07/2024 09:00 BST 0.8393 Buy EUR/GBP 19/07/2024 22:00 BST 0.8426 0.81%
15/07/2024 09:00 BST 1.3654 Sell USD/CAD 19/07/2024 22:00 BST 1.3730 -1.37%
15/07/2024 09:00 BST 11.7264 Sell EUR/NOK 19/07/2024 22:00 BST 11.8798 -1.09%
08/07/2024 09:00 BST 0.8457 Buy EUR/GBP 12/07/2024 22:00 BST 0.8397 -1.11%
01/07/2024 09:00 BST 0.8491 Buy EUR/GBP 05/07/2024 22:00 BST 0.8458 -0.93%
24/06/2024 09:00 BST 0.8466 Buy EUR/GBP 28/06/2024 22:00 BST 0.8473 0.13%
24/06/2024 09:00 BST 159.69 Sell USD/JPY 28/06/2024 22:00 BST 160.88 -0.54%
17/06/2024 09:00 BST 157.54 Sell USD/JPY 21/06/2024 22:00 BST 159.80 -1.03%
17/06/2024 09:00 BST 0.84 Buy EUR/GBP 21/06/2024 22:00 BST 0.8456 0.26%
17/06/2024 09:00 BST 168.55 Sell EUR/JPY 21/06/2024 22:00 BST 170.77 -0.97%
10/06/2024 09:00 BST 168.98 Sell EUR/JPY 14/06/2024 22:00 BST 168.43 0.24%
10/06/2024 09:00 BST 157.00 Sell USD/JPY 14/06/2024 22:00 BST 157.40 -0.18%
03/06/2024 09:00 BST 170.37 Sell EUR/JPY 07/06/2024 22:00 BST 169.33 0.45%
13/05/2024 09:00 BST 167.96 Sell EUR/JPY 17/05/2024 17:45 BST 169.17 -0.53%
11/12/2023 09:00 GMT 146.2300 Sell USD/JPY 15/12/2023 22:00 GMT 142.1500 3.28%
11/12/2023 09:00 GMT 11.2644 Buy EUR/SEK 15/12/2023 22:00 GMT 11.1985 -0.62%
04/12/2023 09:00 GMT 11.3104 Buy EUR/SEK 08/12/2023 22:00 GMT 11.2614 -0.45%
27/11/2023 09:00 GMT 163.1500 Sell EUR/JPY 01/12/2023 22:00 GMT 159.7500 3.31%
20/11/2023 09:00 GMT 162.3800 Sell EUR/JPY 24/11/2023 22:00 GMT 163.4700 -1.07%
13/11/2023 09:00 GMT 151.8100 Sell USD/JPY 17/11/2023 22:00 GMT 149.6300 2.84%
13/11/2023 09:00 GMT 1.3806 Sell USD/CAD 17/11/2023 22:00 GMT 1.3657 1.42%
13/11/2023 09:00 GMT 162.3000 Sell EUR/JPY 17/11/2023 22:00 GMT 163.2700 -0.96%
06/11/2023 09:00 GMT 149.4700 Sell USD/JPY 10/11/2023 22:00 GMT 151.4878 -2.00%
06/11/2023 09:00 GMT 160.6800 Sell EUR/JPY 10/11/2023 22:00 GMT 161.9300 -1.07%
30/10/2023 09:00 GMT 11.7939 Sell EUR/SEK 03/11/2023 22:00 GMT 11.6855 0.91%
23/10/2023 09:00 BST 11.6735 Sell EUR/SEK 27/10/2023 22:00 BST 11.7746 -0.90%
Closed PIX 2.0 FX Spot Trades
Open date Time Entry Recommendation Close date Close time Exit level P&L
02/10/2023 09:00 BST 1.2192 Buy GBP/USD 06/10/2023 22:00 BST 1.2237 0.49%
02/10/2023 09:00 BST 1.0573 Buy EUR/USD 06/10/2023 22:00 BST 1.0586 0.12%
02/10/2023 09:00 BST 0.6410 Buy AUD/USD 06/10/2023 22:00 BST 0.6314 -2.03%
25/09/2023 09:00 BST 1.2244 Buy GBP/USD 29/09/2023 22:00 BST 1.2204 -0.44%
25/09/2023 09:00 BST 1.0638 Buy EUR/USD 29/09/2023 22:00 BST 1.0573 -0.84%
Closed Month-End FX Spot Trades
Open date Time Entry Recommendation Close date Close time Exit level P&L
25/06/2024 08:00 BST 1.0734 / 0.8460 Long EUR vs basket 28/06/2024 17:00 BST 1.0711 / 0.8476 -0.02%
28/05/2024 08:00 BST - Short USD vs basket 31/05/2024 17:00 BST - -0.16%
25/04/2024 08:00 BST 1.0723 / 0.85787 Short EUR vs basket 30/04/2024 17:00 BST 1.0717 / 0.8538 0.84%
26/03/2024 08:00 GMT - Short USD vs basket 29/03/2024 17:00 GMT - -0.70%
26/02/2024 08:00 GMT - Short USD vs basket 29/02/2024 17:00 GMT - -0.94%
26/01/2024 08:00 GMT 1.0819 / 0.8533 Long EUR vs basket 31/01/2024 17:00 GMT 1.0855 / 0.8526 0.26%
*Returns calculated as %VaR with 2% risk allocation per trade
**Cost is a percentage of the notional value traded

Source all tables: Crédit Agricole CIB

4
FX Weekly 21 February 2025 (07:41 CET)

FX Focus
This is a reproduction of SEK: somewhat stockier published 18 February 2025
 The SEK has outperformed all its G10 FX peers so far this month, with of
special note EUR/SEK sliding to fresh eight-month lows just short of
11.20. The SEK has arguably benefited from (1) its nature as a higher-
beta EUR proxy thanks to revived prospects of a European peace
dividend, and (2) coming to terms with the Riksbank’s wait-and-see
stance following the domestic outburst of inflation last month.

 Such a showing of SEK strength has come faster than what our more
gradual recovery path suggests, ie, a first re-visit of 11.10 by EUR/SEK
only towards year-end, which would be a first since late 2023.
Nevertheless, the main condition for durable SEK gains in the long run
has in our view not been fully satisfied yet, as recent evidence does not
look sufficiently convincing to guarantee that the Swedish economy has
fully turned the corner of the stagnation years, let alone outperform the
Eurozone.

 Some hurdles still loom in the way of the tentative SEK pick-up too. The
Riksbank’s recent decision to take a big SEK outflow off-market
highlights how fragile the latest spot progress could well be. Sweden’s
dividend payment season is due to start in a bit more than a month, a
factor that was sometimes flagged last year to try to explain the
surprising SEK losses between mid-March and the end of April. On a
longer-term horizon, next year’s change in Sweden’s pension fund
system hints at possibly lesser hedging requirements of foreign
assets/cash flows, possibly weighing on the SEK.

 All in all, it still appears a bit too premature to us to crystallise the recent
SEK gains in the front end of our forecasts, so we stick to our cautiously
constructive SEK view for the year ahead.

Fig 1. EUR/SEK has fallen to eight-month lows thanks in Fig 2. SEK money markets have come to terms with
part to the SEK being a high-beta EUR proxy January’s Riksbank cut being potentially the last one
12.50 0.95 3.0

12.00 1.00 2.8

1.05 2.6
11.50
2.4
1.10
11.00 2.2
1.15
2.0
10.50
1.20 1.8
10.00 1.25 1.6
9.50 1.30 1.4
Jan-18 Jan-20 Jan-22 Jan-24 Jan-24 Apr-24 Jul-24 Oct-24 Jan-25

EUR/SEK EUR/USD (rhs, inv.) SEK OIS 1Y1Y fwd (%)

Source: Crédit Agricole CIB, Bloomberg Source: Crédit Agricole CIB, Bloomberg

Having spent the previous three months on the backburner, the SEK has suddenly
come back to life in February, outperforming all its G10 FX peers over that period.
EUR/SEK has thus been able to break away from its tight range-trading around
11.50, falling sharply to fresh eight-month lows just short of 11.20. There has not
been a single clear catalyst behind this SEK resurgence, although:
1. EUR/USD’s strong rejection of sub-1.02 levels, coupled with resilient risk
appetite, following extra twists and turns in the US tariff saga has possibly
underpinned the SEK’s nature as a higher-beta EUR proxy;
2. The European peace dividend might have been exacerbated by growing
prospects of some sort of resolution in the Ukraine-Russia conflict;
3. The big upside surprise in Sweden’s inflation data for January has reinforced
the Riksbank’s wait-and-see stance, with a policy rate already at 2.25%, as

5
FX Weekly 21 February 2025 (07:41 CET)

the core CPIF rate jumped from 2.0% to an eight-month high of 2.7% YoY (vs
2.4% forecast by the Riksbank).

Not so quick
This SEK strength has in the end come faster than what our more gradual recovery
path suggests: EUR/SEK at 11.50 at the end of Q125, 11.40 at the end of Q225,
before aiming for 11.10 only towards year-end, which would be a first since late
2023. And the main condition for durable SEK gains in the long run has in our view
not been fully satisfied yet. Indeed, recent evidence does not look sufficiently
convincing to guarantee that the Swedish economy has fully turned the corner of
the stagnation years, let alone outperform the Eurozone. Sweden’s first GDP
estimate for Q424 pointed to modest growth of 0.2% QoQ, although there could be
an encouraging sign that in previous quarters the final mark ended up significantly
higher. Meanwhile, Sweden’s latest jobs report may have rung some alarm bells.
Despite being mainly due to a surge in the labour force, Sweden’s unemployment
rate surprisingly spiked to above the peaks of 2020 and 2021 in January (to 9.7%
seasonally adjusted, vs steady 8.5% expected), which may in turn call for extra
caution among Swedish households that have been hit hard by the cost-of-living
crisis over the years, and subsequently temper the hopes of a rebound in private
spending based off a faster pass-through of monetary easing.

Fig 3. Sweden’s macro outperformance vs the Eurozone Fig 4. Surprising jump in Sweden’s unemployment rate
remains the backbone of durable SEK gains could question consumption-led growth pick-up
8 % % 15 10
6 9.5
10
4 9
5
2 8.5
0 0 8
-2 7.5
-5
-4 7
-10
-6 6.5
-8 -15 6
2010 2012 2014 2016 2018 2020 2022 2024* Jan-10 Jan-13 Jan-16 Jan-19 Jan-22 Jan-25
Sweden GDP EZ GDP Annual perf SEK vs EUR (rhs) Sweden unemployment rate (%, seasonally adjusted)

Source: Crédit Agricole CIB, Bloomberg Source: Crédit Agricole CIB, Bloomberg
* forecasts from European Commission, Swedish Government

No pain, no gain
While waiting for more comprehensive evidence of Sweden’s macro
outperformance vs the Eurozone, some hurdles also loom in the way of the
tentative SEK pick-up, on a more or less distant horizon.
First is more a sign of how fragile the recent SEK resurgence could remain in the
eye of domestic policymakers, as the Riksbank announced yesterday that it agreed
with a Eurosystem central bank to take off-market the EUR conversion of Sweden’s
EU budget payment this month (initially made in SEK by the government). This is
not an unusual process, as it was last used during the initial FX spot sales made
for the FX reserves hedging programme, which was completed over a year ago.
But the amount of this month’s flow is fairly large (SEK7.9bn), as the Riksbank will
then use a wider time-window (two months vs one month in prior occurrences) to
gradually buy the FX back.
The second potential headwind comes from the upcoming season of dividend
payments in Sweden (from late March to early May) and how much of that is
repatriated by foreign investors. While the FX impact of such flows could not be
easily predicted in advance, it is interesting to note that last year this period
coincided with a significant SEK underperformance that proved difficult to explain
otherwise. We note SEK dividend payments from OMX members still swelled
substantially from 2023 to 2024 (c.SEK33bn), whereas the 2025 tally looks set to
increase only modestly (c.SEK3bn), which may somewhat tame the chances of
another five-decimal rally in EUR/SEK.

6
FX Weekly 21 February 2025 (07:41 CET)

On a more long-term horizon, the Swedish government has just announced the
reshaping of its state pension system from 1 January 2026. In particular, the fund
dedicated to private equity will merge with another one, which will subsequently
loosen the strict requirement of FX hedging on c.SEK75bn of foreign assets. While
it remains to be seen what portfolio managers will in the end opt for, a year of a
rather stable SEK following a decade-long slide could favour keeping a more
prudent approach with FX hedging (selling FX/buying SEK forward) rather than
completely ditching it.

Fig 5. Sweden’s dividend payment season coincided Fig 6. We retain a cautiously constructive view on the
with large SEK underperformance last year SEK
180 bn Divident payments from OMX members bn -4.5 12.00
11.75
120 -3.0
11.50
60 -1.5
11.25
0 0.0 11.00
10.75
-60 1.5
10.50
-120 3.0
10.25
-180 4.5 10.00
2023 2024 2025 Jan-22 Jan-23 Jan-24 Jan-25
SEK USD (rhs) EUR (rhs) CHF (rhs) EUR/SEK CACIB forecasts BBG consensus

Source: Crédit Agricole CIB, Bloomberg Source: Crédit Agricole CIB, Bloomberg

Conclusion
With those risks in mind, and a still very much fluid geopolitical backdrop, it still
appears a bit too premature to us to crystallise the recent SEK gains in the front
end of our forecasts, so we stick to our cautiously constructive SEK view for the
year ahead, which targets EUR/SEK at 11.10 by the end of 2025.

7
FX Weekly 21 February 2025 (07:41 CET)

FX Focus recent publications

Release Publication Link
18/02/2025 FX Focus SEK: somewhat stockier
12/02/2025 FX Focus EUR/USD: the dark before the dawn?
07/02/2025 FX Focus JPY: what is the impact of Trump tariffs on the Japanese economy?
23/01/2025 FX Focus AUD: inflation, the RBA and our forecasts
06/01/2025 FX Focus Japan: what is the outlook for BoJ rate hike in 2025?
04/12/2024 FX Presentation 2025 FX outlook: “Making the USD great again 2.025”
29/10/2024 FX Focus US election and G10 FX: one winner and many losers
28/10/2024 FX Focus JPY & the Japan election: no more bye, bye Abenomics
24/10/2024 FX Volatility Monitor Election twist?
23/10/2024 FX Focus The USD and the US election: the 4% rule
18/10/2024 FX Focus JPY: Japan election scenarios
14/10/2024 FX Focus US trip notes: a battleground state
02/10/2024 FX Focus JPY: bye, bye Abenomics?
01/10/2024 FX Volatility Monitor FX volatility when the Fed starts big with easing
26/09/2024 FX Focus Not getting any easier
26/09/2024 FX Presentation “A hard or soft landing for the USD?”
17/09/2024 FX Focus AUD: is resistance futile?
11/09/2024 FX Focus EUR/USD: still negative but not as bearish as before
04/09/2024 FX Focus USD: the Fed, nominal r*, US recessions and all that
28/08/2024 FX Focus JPY: all change
04/07/2024 FX Presentation 2024 FX Outlook: “The price of USD exceptionalism”
03/07/2024 FX Focus What can rescue the JPY?
27/06/2024 FX Presentation UK 2024 general election: pounding above its weight
25/06/2024 FX Focus GBP: a difficult labour after the July election?
20/06/2024 FX Focus European rates and the EUR: between a far-right and a hard left
12/06/2024 FX Focus EUR/USD: why (still) so bearish
30/05/2024 FX Focus SEK to miss out more than NOK on summer fervour
22/05/2024 FX Focus GBP: keep calm and carry on
13/05/2024 FX Focus USD: Plaza Accord 2.0 vs Trump’s ‘impossible trinity’
08/05/2024 Economics Focus Japan: Q&A regarding the JPY remaining at historically weak levels
02/05/2024 FX Focus AUD: the comeback kid?
23/04/2024 FX Volatility Monitor Spot the differences
16/04/2024 FX Focus EUR/USD: parity passu
11/04/2024 FX Focus CAD: not really off the fence
27/03/2024 FX Presentation 2024 FX Outlook: “The price of USD exceptionalism”
21/03/2024 FX Focus JPY: not much of a fundamental shift
14/03/2024 FX Focus XAU: Goldilocks? Not just yet
13/03/2024 FX Volatility Monitor Roll on the US elections
06/03/2024 FX Focus USD: what 50 years of history can teach us about the next 6-12
months (the sequel)
26/02/2024 FX Focus Introducing our FX carry trades scorecard
22/02/2024 FX Focus JPY: NISA nothing?
20/02/2024 FX Volatility Monitor Carry trades and FX vols
13/02/2024 FX Focus CHF: more to give up on
31/01/2024 FX Focus EUR/USD: why so bearish
25/01/2024 FX Focus AUD: deflating appeal?
17/01/2024 FX Focus BoJ to bring ‘tiers’ of joy to the JPY?
15/01/2024 FX Focus De-dollarisation? More like de-EUR-isation…
04/12/2023 FX Outlook 2024 FX Outlook: “The dark side of the USD smile”

8
FX Weekly 21 February 2025 (07:41 CET)

Week ahead: key themes & trades

The outcome of the German general
EUR: all eyes on the German election. The 23 February German
election could determine the near-
general election could prove to be one of the most consequential in recent history. term EUR outlook. In particular, a
This is partly due to the dire state of the economy that warrants urgent and decisive confirmation of our central case for a
government policies and that the outgoing ruling coalition was unable to implement. mainstream coalition led by the
In addition, the strong polling of the anti-EU AfD has become an important FX risk CDU/CSU could give the EUR a boost
ahead of the vote, given that the party could emerge as a kingmaker in the new because it would assuage market
Bundestag and complicate and slow down the building of a governing coalition. fears of a better showing by the AfD.
Furthermore, recent client meetings have highlighted investors’ concern that the In contrast, we think that the worst
polls may not represent the true extent of support for the fringe party. outcome for the EUR would be
Polls will close at 17:00 GMT on 23 February with the first exit polls available shortly evidence of significantly stronger
after that. The election results would be tallied in the hours after and first results support for the AfD than implied by
would be announced closer to 5:00 GMT on 24 February. The opinion polls ahead current polls
of the election continue to suggest that the CDU/ CSU could emerge as the largest
party in the Bundestag. Subsequently, the CDU leader Friedrich Merz is expected
to become Germany’s next Chancellor in charge of a mainstream coalition
government of the CDU/CSU and the SPD or the Greens or both. Investors expect
that the new coalition could pave the way to more aggressive fiscal spending that
could help the German economy recover from its recession. Depending on their
showing, investors have also discussed a possible CDU/CSU-led coalition
involving the centre-right FDP as well as a centre-left coalition of the SPD, Greens
and the Linke.
Turning to the FX market reaction, we believe that the EUR could regain some
ground if our and the market’s central case for a mainstream coalition led by the
CDU/CSU is confirmed. This is because a corroboration of recent opinion polls
could assuage market fears of a better showing by the AfD in our view. We would
expect EUR/USD to regain more ground in the direction of 1.06. In contrast, we
think that the worst outcome for the EUR would be evidence of significantly
stronger support for the AfD than implied by current polls. This could complicate
any attempts to build a coalition government consisting of mainstream parties and
push EUR/USD back to recent lows around 1.03. Last but not least, evidence that
both the CDU/CSU fared worse than expected and the left-wing parties – better, at
the election could boost expectations of a potential centre-left coalition that could
be seen as EUR-positive to the extent that a coalition tries to pursue a more
aggressive fiscal policy.
Next to the outcome of the German election, FX investors would focus on the
Eurozone economic confidence and the German ifo for February as well as the
final CPI print for January that are due for release in the week ahead. Also on the
docket, we will have speeches by the ECB’s Isabel Schnabel and Joachim Nagel.
valentin.marinov@ca-cib.com

USD: Trump giveth, Trump taketh. The USD remains the weakest G10 In the absence of any upside
currency so far this month and since the start of 2025. The underperformance has surprises from the US Core PCE
been attributed to improving market risk sentiment that has eroded demand for the deflator data and/ or hawkish
safe-haven USD. In turn, the risk appetite recovery could be linked to hopes that Fedspeak next week, persistent Fed
the Trump administration would be using tariffs as a negotiation tool and could rate cut expectations could continue
further shy away from relying on aggressive, blanket trade levies. In addition, the to dent the USD appeal. In addition,
efforts of the Trump administration to cut government spending are seen as both risk sentiment could remain resilient in
a reason to expect lower long-term UST yields and doubt that the US growth the absence of tariff tape-bombs, in a
outperformance would continue. Last but not least, President Donald Trump’s blow to the safe-haven USD
recent attempts at ‘rapprochement’ with Russia have boosted market hopes for an
earlier end to the war in Ukraine as well as a potential boost to global energy supply
that could play out as a positive supply shock for the economies of energy
importers. These efforts have helped ease global financial conditions in another
blow to the high-yielding, safe-haven USD.
Looking ahead into next week, focus will be on the Core PCE deflator data for
January – the Fed’s preferred inflation measure as well as the Conference Board
Consumer Confidence for February. In addition, FX investors will focus on

9
FX Weekly 21 February 2025 (07:41 CET)

speeches by the Fed’s Lorrie Logan, Thomas Barkin, Raphael Bostic, Beth
Hammack and Patrick Harker. In the absence of any meaningful upside surprises
from the inflation data or hawkish surprises from Fedspeak, chances are investors
could continue to expect that the FOMC could lower rates further in the coming
months. In addition, global risk sentiment could remain resilient if the German
election over the weekend does not produce any major surprises and/or President
Trump refrains from ‘lobbing’ fresh tariff tape-bombs. As a result, the high-yielding,
safe-haven USD could continue to struggle across the board.
valentin.marinov@ca-cib.com

EUR/CHF well anchored in the middle

CHF: watching from the sidelines. Since having another brief look of 0.93-0.95
above 0.95 last week, EUR/CHF has gradually drifted back towards the middle of
the tight 0.93/0.95 trading range that has prevailed for the best part of the past six
months. The CHF has benefited from increasing demand in safe-havens like gold
and the JPY, as the international context remains very fluid. Of special note, US
President Trump has adopted a tougher stance with Ukraine, while leaving Europe
out of the main negotiating table, which may ultimately raise questions over how
much of a peace dividend Europe could eventually get. Nevertheless, such
developments have not been enough to cause a major risk repricing by FX option
markets for the CHF which in any case could continue to pay more attention to
abroad than anything domestically. Thursday’s Swiss GDP for Q424 could still
point to a pick-up in activity when stripping out the seasonal distortions linked to
one-off payments regarding major international sporting events, while the latest
external trade figures for January showed that Swiss exporters continue to cope
fairly well with a strong CHF. All in all, Switzerland’s economic resilience should
continue to act as a buffer against any large nominal depreciation of the CHF in
the long run, while lower inflation differentials vs most other developed economies
should also help cool the CHF’s real valuations. Against this backdrop, we only
look for EUR/CHF to target 0.97 by the end of the year, once reduced global
uncertainties eventually allow the pair to break away from its range trading pattern.

FX options have not repriced CHF risks in the wake of CHF real valuation has cooled to lowest in eight months
very fluid geopolitics
0.0 106
-0.2 104
-0.4 102
-0.6
100
-0.8
98
-1.0
-1.2 96

-1.4 94
-1.6 92
Jan-24 Apr-24 Jul-24 Oct-24 Jan-25 Jan-15 Jul-16 Jan-18 Jul-19 Jan-21 Jul-22 Jan-24
3M EUR/CHF 25-delta risk reversal CHF REER (BIS, broad)

Source: Crédit Agricole CIB, Bloomberg Source: Crédit Agricole CIB, Bloomberg

alexandre.dolci@ca-cib.com

The rising risk of a peace deal

JPY: clean out. Several factors are supporting the JPY. The first factor is between Russia and Ukraine not
higher JGB yields on the back of an upside surprise in Japan GDP and CPI data occurring is giving the JPY a boost
as well as BoJ hawk, Hajime Takata, pushing the probability of another rate hike
by mid-2025 higher. BoJ Governor, Kazuo Ueda, has pushed back a bit against
the rise in long-end JGB yields expressing concern about their rapid rise and
willingness to buy more JGBs if their yields continue to rise sharply. Second, while
the Fed Minutes suggested the FOMC is firmly on hold given the uncertainties
around US President Donald Trump’s tariff policies and their effects on inflation
and growth, Fed rhetoric around potentially slowing or pausing QT due to debt
ceiling concerns led to lower long-end UST yields. Third, growing tensions between
the EU and the US and especially US President Donald Trump and Ukrainian

10
FX Weekly 21 February 2025 (07:41 CET)

President Volodymyr Zelenskiy are reducing the possibility of a peace deal

between Russia and Ukraine giving the safe-haven JPY a boost. The US-Japan
rates spread will see more volatility in the coming week with the release of US GDP
and consumer confidence data as well as Tokyo CPI data. We also think the
outcome of the German election will be important for the JPY. EUR/JPY is hovering
above important technical support around 156 and an uncertain result and/or a
strong showing by the far-right AfD would weigh further on the EUR, potentially
leading to further clearing out of JPY short positions and lead to broader JPY
strength on the back of rising risk aversion.

A falling US-Japan long-term rates spread is weighing Rising risk aversion helping the JPY
on USD/JPY
10.0 100 2.5 Risk aversion 90
80 2.0
5.0 60 88
1.5
40
0.0 20 1.0 86
0 0.5
-5.0 -20 84
0.0
-40
-0.5 82
-10.0 -60
-80 -1.0
80
-15.0 -100 -1.5
Jun-20 Jun-21 Jun-22 Jun-23 Jun-24 -2.0 78
USD/JPY % MoM Jan-24 Mar-24 May-24 Jul-24 Sep-24 Nov-24 Jan-25
US-Japan 10Y rate differential MoM bp (rhs) CACIB FX Risk Index JPY TWI (rhs)

Source: Bloomberg, Crédit Agricole CIB Source: Bloomberg, Crédit Agricole CIB

david.forrester@ca-cib.com

EUR/GBP has revisited sub-0.83 as

GBP: not much headroom. EUR/GBP has made a more convincing
the UK may appear less at risk than
return sub-0.83 this week, which would have marked YTD lows if it was not for the
the Eurozone to near-term
erratic market opening caused by Trump’s tariff threats over a weekend in early
political/geopolitical risks
February. This move in FX has come somewhat at odds with rather steady rate
differentials this month, as the GBP has perhaps fared better than the EUR thanks
to (1) the UK being a less obvious target for the US administration as Trump
recently mooted levies on imported cars, and/or (2) lesser political risks
domestically as Germany’s federal elections loom just ahead. Meanwhile, UK
macro releases continue to come out fairly mixed, as of special note a more
pronounced rise in the headline CPI rate to a 10-month high of 3.0% YoY in
January was offset by milder-than-expected inflationary pressures in the UK
services sector. Yet, upcoming UK activity data could prove more decisive in the
BoE’s reaction function after the February MPR revived stagflation concerns.
Therefore, any marked weakness in today’s UK retail sales and flash PMIs for
February could possibly shift the needle for what looks poised to be a very close
MPC vote in a month’s time. That is also why the stream of BoE speakers in the
week ahead could be closely scrutinised by the markets for any eventual hints, and
especially so coming from the more centrist members like Clare Lombardelli,
although Catherine Mann’s sharp turnaround should caution that nothing can be
ruled out. Besides macro/monetary considerations, any further overshoot in
today’s public sector borrowing figures for January could further pile pressure onto
the UK Chancellor ahead of the 26 March Budget review to either reduce
spending/increase taxes, at a time when the UK economy is far from doing as well
as the 2% growth forecast embedded in the Autumn Budget.

11
FX Weekly 21 February 2025 (07:41 CET)

EUR/GBP has fallen back under 0.83 despite rather A key reality-check for the UK macro outlook in the near
stable rate differentials term
0.90 -50 65
0.89
60
0.88 -100
0.87 55
0.86 -150
50
0.85
0.84 -200 45
0.83
0.82 -250 40
Jan-23 Jul-23 Jan-24 Jul-24 Jan-25 Feb-22 Aug-22 Feb-23 Aug-23 Feb-24 Aug-24

EUR/GBP 2Y ESTR-SONIA spread (bp, rhs) UK composite PMI Services Manufacturing

Source: Bloomberg, Crédit Agricole CIB Source: Bloomberg, Crédit Agricole CIB

alexandre.dolci@ca-cib.com

CAD: not so fast. USD/CAD has been consolidating last week’s fall to USD/CAD has consolidated last
two-month lows just short of 1.4150, as the pair has failed to echo the tightening in week’s lows, waiting for more clarity
USD-CAD rate differentials over the past week. It is not very clear whether this rate on the tariff front
move reflects mainly (1) a small risk premium around a full-blown trade war, after
the US ambassador to Canada noted some progress in tackling the border/drug
issues, which may in turn offer Canada’s exports a longer reprieve past 3 March.
Or (2) reduced prospects of extra BoC cuts after Canada’s CPI came out
somewhat stickier than expected in January, especially when looking through the
distortion caused by the temporary sales tax break. In any case, even though our
Q124 forecasts of 1.41 for USD/CAD are very much in play, it still appears too
premature to claim that the CAD is out of the woods and that less choppy waters
loom just ahead, as of special note USD/CAD risk reversals have recently become
richer, halting a continued cooling in the month earlier on. Canada’s light domestic
agenda for the week ahead will not provide any major distraction, as today’s retail
sales for December and January will also be massively distorted by the sales tax
break and BoC Governor Tiff Macklem is unlikely to bring fresh food for thought
while waiting for some clarity on the tariff front.

USD/CAD has stabilised despite tighter rate differentials Rebound in USD/CAD risk reversals suggests that the
over the past week CAD is not completely out of the woods
1.46 180 2.0
1.44 160
140 1.5
1.42
120
1.40 1.0
100
1.38 80
0.5
60
1.36
40 0.0
1.34 20
1.32 0 -0.5
Jan-24 Apr-24 Jul-24 Oct-24 Jan-25 Jul-24 Sep-24 Nov-24 Jan-25
USD/CAD 2Y USD-CAD OIS spread (bp, rhs) 1M USD/CAD 25-delta risk reversal

Source: Bloomberg, Crédit Agricole CIB Source: Bloomberg, Crédit Agricole CIB

alexandre.dolci@ca-cib.com

The reluctance of the RBA to cut rates

AUD & NZD: hawkish hike and a dovish cut. Despite the RBA further will be an underlying support
and RBNZ both cutting rates this week, the AUD and NZD have held firm. The for the AUD in the near term
RBA’s hawkish cut was a support for the AUD. Governor Michele Bullock
suggested the central bank will be waiting a long time before cutting rates further.
We continue to think the reluctance of the RBA to cut rates further will be an

12
FX Weekly 21 February 2025 (07:41 CET)

underlying support for the AUD, but that the RBA will cut rates twice more by 25bp,
likely in H225. In H225, the central bank will have a clearer view about whether
inflation is coming sustainably back within its target band, Trump tariffs and Federal
government spending after the general election that has to be held by 17 May.
While the RBA will not shift on one monthly CPI data print, Australia’s monthly CPI
data next week will affect market pricing for the RBA and the AUD. In the first month
of the quarter, monthly CPI data is weighted more towards goods than services,
this has previously produced a downside bias in the data earlier in the quarter. But
higher fuel prices and the bottoming out in good prices as global supply chains
have normalised means the risk next week is of reacceleration in inflation.
Australian CAPEX data will highlight a firm business investment pipeline. While
Bullock has highlighted the importance of productivity growth in reducing
underlying inflation and allowing the economy to grow faster without aggravating
inflation, the RBA’s Head of Economic Analysis, Michael Plumb’s speech on
productivity is not likely to shift market pricing for the RBA.
The RBNZ performed a dovish 50bp cut bringing forward when it expects to reach
its terminal rate by over a year, but its terminal rate remained the same at 3.10%
and was in line with NZ rates market pricing ahead of the meeting. These facts
combined with a slower pace of rate cuts going forward indicated by Governor
Adrian Orr provided the NZD with support. High frequency data remains in focus
for the RBNZ and the market and business survey data is among these. Business
activity and confidence data could gain a lift as expectations for another 50bp rate
cut by the RBNZ were built in during the survey period. There was also a strong
rise in dairy auction prices. While NZ retail sales data likely remained weak in Q4,
the data is dated.
US consumer sentiment and GDP data will also be important for the Antipodeans
in the coming week. Part of the support for the AUD and NZD this week has come
from a broadly weaker USD due to falls in UST yields. There has also been an
element of long USD position clearing.

A rise in the Australian-US short-term yield differential is NZD/USD to stop falling given the bottoming out in the
giving AUD/USD a boost NZ-US short-term rate differential?
0.80 700 0.90
80
600 0.85
60
40 500 0.80
0.75
20 400 0.75
0 0.70
300
-20 0.70 0.65
200
-40 0.60
-60 100 0.55
0.65
-80 0 0.50
-100 -100 0.45
-120 0.60 -200 0.40
Oct-21 Apr-22 Oct-22 Apr-23 Oct-23 Apr-24 Oct-24 Jan-90 Jan-96 Jan-02 Jan-08 Jan-14 Jan-20
Aust-US 3Y yield (bp) AUD/USD (rhs) NZ-US 2Y govt bond yield bp NZD/USD (rhs)

Source: Bloomberg, Crédit Agricole CIB Source: Bloomberg, Crédit Agricole CIB

david.forrester@ca-cib.com

EUR/SEK extends its slide near our

year-end forecasts of 11.10, while the
NOK & SEK: leading the way. The SEK has not necessarily NOK still struggles to break away from
outperformed its G10 FX peers over the past week, and certainly not the JPY, but well-established range trading
it is still on track to end at the top of February’s ranking. Yet, EUR/SEK has kept
drifting gradually south to the extent that last year’s lows are now just in sight, as
momentum has seemingly outweighed not-so-supportive exogenous factors, such
as EUR/USD’s pullback and Europe’s loss of influence in the Ukraine-Russia
conflict. Domestically, the announcement that the Riksbank agreed to take a big
SEK selling flow (linked to EU Budget) off market has possibly helped keep the
ongoing SEK rally intact, while the decision may also highlight how fragile the
recent SEK resurgence remains in the eyes of policymakers. Meanwhile, January’s
outburst of inflation was confirmed, with the breakdown pointing to rentals and food
prices as the largest contributors to that upturn, which does not really look like a

13
FX Weekly 21 February 2025 (07:41 CET)

consequence of increased discretionary spending. There is so far not enough

evidence to guarantee that the Swedish economy has definitively turned the corner
of stagnation and is on its way to outperform the Eurozone this year, which in our
view is a necessary condition for the SEK to cement durable gains against the
EUR. Therefore, with EUR/SEK being almost at our year-end target, and almost
no carry cost to endure, it could look appealing to lock-in current spot levels to
hedge long SEK exposure for the year ahead.
Over the past week, the NOK has been able to largely keep up pace with the SEK,
as NOK/SEK dipped sub-0.96 for the first time in four months. Norway’s biggest
monthly trade surplus in over two years (at NOK95bn in January) may have already
looked too backdated to give the NOK a fillip, as energy prices have more recently
cooled. The domestic calendar for the week ahead does not seem to provide a
more potent market mover for the NOK, which should instead keep a close eye on
oil and natural gas prices, as well as global risk appetite. Assuming no dramatic
market turmoil, we believe that current NOK/SEK levels do not necessarily reflect
Norway’s superior fundamentals and historically wide rate differentials; we thus
went long NOK/SEK yesterday.

SEK still tops February’s G10 FX ranking NOK/SEK has fallen to its lowest level since October
1.10
4
1.05
3

1.00
2

1 0.95

0 0.90
SEK JPY AUD CAD NZD GBP NOK CHF EUR Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25
MTD performance vs USD (%) NOK/SEK

Source: Bloomberg, Crédit Agricole CIB Source: Bloomberg, Crédit Agricole CIB

alexandre.dolci@ca-cib.com

14
FX Weekly 21 February 2025 (07:41 CET)

FX Positioning Update
This is our weekly update published 17 February 2025 For more information please refer to
 At present, the G10 FX PIX 2.0 signals that positioning is close to the the FX Focus – Introducing G10 FX
medium-term average for all currencies in the G10 space. We have PIX: our new G10 FX Positioning
temporarily suspended the model’s trading strategy for maintenance but Index
hope to be able to report new FX trading signals soon.

 The USD remains the biggest long in the G10 FX despite further mild
selling interest last week, predominantly driven by Risk Reversals flows.
Our FX flow data points at banks, corporates and real money investors
inflows, as well as hedge funds outflows.

 The EUR enjoyed new buying interest last week, predominantly driven
by Risk Reversals flows. Our FX flow data points at banks and real
money investors inflows, as well as corporates and hedge funds
outflows.

 The JPY experienced some selling interest last week, predominantly

driven by Risk Reversals flows. Our FX flow data points at banks,
corporates, hedge funds and real money investors outflows. All in all,
the JPY is no longer in overbought territory.

 The CHF enjoyed fresh buying interest last week, predominantly driven
by IMM flows. Our FX flow data points at hedge funds inflows, as well as
banks, corporates and real money investors outflows.

 The GBP saw fresh buying interest last week, predominantly driven by
IMM flows. Our FX flow data points at banks, corporates and real money
investors inflows, as well as hedge funds outflows.

 The CAD remains the largest short in the G10 FX despite fresh buying
interest last week, predominantly driven by IMM flows. Our FX flow data
points at banks, corporates, hedge funds and real money investors
inflows.

 The AUD saw some buying interest last week, predominantly driven by
IMM flows. Our FX flow data points at banks, corporates and hedge funds
and real money investors inflows.

 The NZD enjoyed fresh buying interest last week, predominantly driven
by Crédit Agricole CIB flows. Our FX flow data points at banks,
corporates and real money investors inflows, as well as hedge funds
outflows.

 The NOK experienced fresh selling interest last week, predominantly

driven by algo trading flows based on FX technicals signals. Our FX flow
data points at corporates and hedge funds inflows, as well as banks and
real money investors outflows.

 The SEK enjoyed some buying interest last week, predominantly driven
by Risk Reversals flows. Our FX flow data points at banks inflows, as
well as corporates, hedge funds and real money investors outflows.

15
FX Weekly 21 February 2025 (07:41 CET)

Fig 1. G10 FX positioning at a glance Fig 2. G10 FX positioning – current vs 2M average

3.00 2.1
3.00
2.00
2.00 0.8
1.00 0.5
1.00 0.4
0.00
0.00
-1.00 -0.3 -0.7
-1.00 -0.6 -0.6
-2.00 -1.5
-2.00 -1.9
-3.00
-3.00
USD JPY NOK SEK AUD CHF GBP EUR NZD CAD
USD JPY NOK SEK AUD CHF GBP EUR NZD CAD
Current Previous week Current 2M average

Source: Crédit Agricole CIB Source: Crédit Agricole CIB

Fig 3. Current vs previous week weighted contributions of positioning sub-indices

100%

50%

0%

-50%

-100%
EUR EUR USD USD JPY JPY CHF CHF GBP GBP AUD AUD CAD CAD NZD NZD NOK NOK SEK SEK
Curr Prev Curr Prev Curr Prev Curr Prev Curr Prev Curr Prev Curr Prev Curr Prev Curr Prev Curr Prev
week week week week week week week week week week
Risk Reversals IMM CA-CIB Technicals
Note: A negative (positive) z-score could mean that the change in the underlying positioning data is below (above) its long-term average

Source: Crédit Agricole CIB

Fig 4. Current vs previous week FX flows

100%

50%

0%

-50%

-100%
EUR EUR USD USD JPY JPY CHF CHF GBP GBP AUD AUD CAD CAD NZD NZD NOK NOK SEK SEK
Curr Prev Curr Prev Curr Prev Curr Prev Curr Prev Curr Prev Curr Prev Curr Prev Curr Prev Curr Prev
week week week week week week week week week week
banks corporates hedge funds real money investors

Source: Crédit Agricole CIB

Fig 5. G10 FX PIX 2.0 for EUR Fig 6. G10 FX PIX 2.0 for USD
3.00 3.00 110
105
2.00 2.50 105
2.00
1.00 100 100
1.50
0.00 1.00 95
95
-1.00 0.50 90
90 0.00
-2.00 85
-0.50
-3.00 85 -1.00 80
Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 Jan-22 Jan-24 -1.50 75
Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 Jan-22 Jan-24

G10 FX PIX 2.0 EUR TWI (rhs) G10 FX PIX 2.0 USD TWI (rhs)

Source: Crédit Agricole CIB, Bloomberg Source: Crédit Agricole CIB, Bloomberg

16
FX Weekly 21 February 2025 (07:41 CET)

Fig 7. G10 FX PIX 2.0 for JPY Fig 8. G10 FX PIX 2.0 for CHF
3.00 3.00 120
120 115
2.00 2.00
110 110
1.00 1.00
105
100 0.00 100
0.00
90 95
-1.00 -1.00
90
-2.00 80 -2.00
85
-3.00 70 -3.00 80
Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 Jan-22 Jan-24 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 Jan-22 Jan-24

G10 FX PIX 2.0 JPY TWI (rhs) G10 FX PIX 2.0 CHF TWI (rhs)

Source: Crédit Agricole CIB, Bloomberg Source: Crédit Agricole CIB, Bloomberg

Fig 9. G10 FX PIX 2.0 for GBP Fig 10. G10 FX PIX 2.0 for AUD
3.00 125 3.00 135

2.00 120 2.00 125

115
1.00 1.00
110 115
0.00 0.00
105 105
-1.00 -1.00
100
-2.00 -2.00 95
95
-3.00 90 -3.00 85
Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 Jan-22 Jan-24 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 Jan-22 Jan-24

G10 FX PIX 2.0 GBP TWI (rhs) G10 FX PIX 2.0 AUD TWI (rhs)

Source: Crédit Agricole CIB, Bloomberg Source: Crédit Agricole CIB, Bloomberg

Fig 11. G10 FX PIX 2.0 for CAD Fig 12. G10 FX PIX 2.0 for NZD
3.00 130 3.00 120
125
2.00 2.00
120 115
1.00 1.00
115
110
0.00 110 0.00
105 105
-1.00 -1.00
100
-2.00 100
95 -2.00
-3.00 90
-3.00 95
Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 Jan-22 Jan-24
Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 Jan-22 Jan-24

G10 FX PIX 2.0 CAD TWI (rhs) G10 FX PIX 2.0 NZD TWI (rhs)

Source: Crédit Agricole CIB, Bloomberg Source: Crédit Agricole CIB, Bloomberg

Fig 13. G10 FX PIX 2.0 for NOK Fig 14. G10 FX PIX 2.0 for SEK
3.00 3.00 120
135
2.00 2.00 115
125
1.00 1.00 110
115
0.00 0.00 105
-1.00 105
-1.00 100
-2.00 95 -2.00 95
-3.00 85 -3.00 90
Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 Jan-22 Jan-24 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 Jan-22 Jan-24

G10 FX PIX 2.0 NOK TWI (rhs) G10 FX PIX 2.0 SEK TWI (rhs)

Source: Crédit Agricole CIB, Bloomberg Source: Crédit Agricole CIB, Bloomberg

17
FX Weekly 21 February 2025 (07:41 CET)

FAST FX Fair Value Model Update

This is our weekly update published 17 February 2025 For more information please refer to
 The FAST FX model lost -1.05% last week being long USD/CAD. The the FX Focus – Introducing our FAST
model has triggered another USD/CAD trade this week. The FAST FX FX fair value model
model is up 5.81% over the past year with a hit rate of 60%.

 USD/CAD’s fair value fell from 1.4523 to 1.4420 due to a fall in the US-
Canada short-term rates spread as well as a rise in global equities, which
was partly offset by a rise in the US-Canada box yield spread. USD/CAD
remains more than 1.5 standard deviations undervalued. The FAST FX
model has triggered a long USD/CAD trade with a stop-loss of -1.79% and
a take-profit level of 1.4420.

 EUR/JPY’s fair value increased from 155.37 to 155.90 due to a rise in the
Eurozone-Japan short-term rates spread as well as a fall in the peripheral
EGB yield spread to Bunds, which was partly offset by the
outperformance of Japan equities by Eurozone equities as well as falls
in the Eurozone-Japan box yield spread and the Eurozone-Japan
commodities terms-of-trade ratio. EUR/JPY is rising faster than its fair
value moving it into overvaluation territory. This overvaluation is just
short of the 1.5 standard deviations required to trigger a sell trade.

 EUR/SEK’s primary model is unstable. Its secondary model estimates

the EUR/SEK’s fair value fell from 11.4352 to 11.3033 due to a fall in the
Eurozone-Sweden box yield spread as well as a rise in global equities.
EUR/SEK is falling faster than its fair value becoming undervalued. This
undervaluation is short of the 2 standard deviations required to trigger a
buy trade when a secondary model is being used to estimate fair value.

New trades this week

Tim e Stam p Entry Pair Direction Spot at entry Take Profit Stop Loss
09:00GMT 2/17/2025 USD/CAD BUY 9am London fix 1.4420 - 1.79%

Source: Crédit Agricole CIB

FX under/overvaluation – z-scores
3.50 Overvalued
3.00
2.50
2.00
1.50
1.00
0.50
0.00
-0.50
-1.00
-1.50
-2.00
-2.50
-3.00
-3.50 Undervalued
EUR/USD USD/JPY EUR/GBP AUD/USD USD/CAD EUR/NOK EUR/SEK NZD/USD EUR/JPY NOK/SEK
Current Last week

Dotted lines mark 1.5 and 2 standard deviations in the Z-score

Source: Crédit Agricole CIB

FAST FX fair value summary

FX spot Under /over

(Friday NY close) Fair value estim ate valuation Z-score Stability filter
EUR/USD 1.0492 1.0514 -0.21% -0.286 stable
USD/JPY 152.31 155.43 -2.01% -1.04 stable
EUR/GBP 0.8336 0.8337 -0.01% -0.02 unstable
AUD/USD 0.6352 0.6318 0.54% 0.57 stable
USD/CAD 1.4182 1.4420 -1.65% -2.72 stable
EUR/NOK 11.67 11.6327 0.32% 0.39 unstable
EUR/SEK 11.2203 11.3033 -0.73% -1.06 unstable
NZD/USD 0.5725 0.5756 -0.54% -0.62 stable
EUR/JPY 159.83 155.90 2.52% 1.33 stable
NOK/SEK 0.9613 0.9640 -0.28% -0.24 stable
For a stable regime – the primary model is used whereby trades are triggered when the z-score is greater than 1.5 or less than -1.5; while for an
unstable regime – the secondary model is used and the trigger level is +/-2 for the z-score.

Source: Bloomberg, Crédit Agricole CIB

18
FX Weekly 21 February 2025 (07:41 CET)

Short-term fair value charts

FAST FX Model performance since 2017 Annual Return since 2018
158 20%

148 15%

138 10%
128
5%
118
0%
108

98 -5%
Jan-17 Jan-19 Jan-21 Jan-23 Jan-25 Jan-18 Jan-20 Jan-22 Jan-24

EUR/USD USD/JPY
1.30 165
160
1.25 155
150
1.20 145
140
1.15 135
1.10 130
125
1.05 120
115
1.00 110
105
0.95 100
Jan-16 Jul-17 Jan-19 Jul-20 Jan-22 Jul-23 Jan-25 Jan-16 Jul-17 Jan-19 Jul-20 Jan-22 Jul-23 Jan-25
EUR/USD FAST USD/JPY FAST

EUR/GBP AUD/USD
0.95 0.85

0.90 0.80

0.75
0.85
0.70
0.80
0.65
0.75 0.60

0.70 0.55
Jan-16 Jul-17 Jan-19 Jul-20 Jan-22 Jul-23 Jan-25 Jan-16 Jul-17 Jan-19 Jul-20 Jan-22 Jul-23 Jan-25
EUR/GBP FAST AUD/USD FAST

USD/CAD EUR/NOK
1.46 12.60
12.20
1.42
11.80
1.38 11.40
1.34 11.00
10.60
1.30 10.20
1.26 9.80
9.40
1.22
9.00
1.18 8.60
Jan-16 Jul-17 Jan-19 Jul-20 Jan-22 Jul-23 Jan-16 Jul-17 Jan-19 Jul-20 Jan-22 Jul-23 Jan-25
USD/CAD FAST EUR/NOK FAST

Note: Shaded area represents 1.5 standard deviation bands

Source all charts: Crédit Agricole CIB, Bloomberg

19
FX Weekly 21 February 2025 (07:41 CET)

EUR/SEK NZD/USD
12.50 0.80
12.00 0.75
11.50
0.70
11.00
0.65
10.50
0.60
10.00
9.50 0.55
9.00 0.50
Jan-16 Jul-17 Jan-19 Jul-20 Jan-22 Jul-23 Jan-25 Jan-16 Jul-17 Jan-19 Jul-20 Jan-22 Jul-23 Jan-25
EUR/SEK FAST NZD/USD FAST

EUR/JPY NOK/SEK
180 1.15
170
1.10
160
1.05
150
140 1.00
130
0.95
120
0.90
110
100 0.85
Jan-16 Jul-17 Jan-19 Jul-20 Jan-22 Jul-23 Jan-25 Jan-16 Jul-17 Jan-19 Jul-20 Jan-22 Jul-23 Jan-25
EUR/JPY FAST NOK/SEK FAST
Note: Shaded area represents 1.5 standard deviation bands

Source all charts: Crédit Agricole CIB, Bloomberg

20
FX Weekly 21 February 2025 (07:41 CET)

FX Fair Value Model Update

This is our latest update published 26 November 2025 For more information please refer to
 The USD’s long-term fair value increased once again in Q324 vs the EUR, the FX Focus – Introducing CACIB’s
CHF, JPY, NOK, CAD and NZD according to our G10 VALFeX fair value FX fair value model: G10 VALFeX
model. This reflected improving relative productivity and growing real
rate & yield advantage of the USD as well as terms-of-trade gains vs the
NOK and CAD. In contrast, the USD’s long-term fair value fell slightly vs
the AUD, GBP and SEK driven mainly by the its waning real rate
advantage and worsening relative external position which more than
offset the gains in its relative productivity.

 According to our estimates, the USD’s long-term fair value increased by

c.0.8% on average while its FX spot rate fell by c.-4.4% on average in
Q324. As a result, the USD looked: (1) overvalued vs the JPY, NOK, AUD
and SEK; (2) slightly overvalued vs the EUR and CAD; (3) close to fairly
priced vs the NZD and GBP; and (4) cheap vs the CHF.

 EUR/USD and NZD/USD saw their fair value drop to 1.094 and 0.578 in
Q324 from 1.110 and 0.591 in Q224 while GBP/USD and AUD/USD saw
their fair value increase to 1.234 and 0.727 in Q324 from 1.231 and 0.721
in Q224, respectively. Elsewhere, USD/JPY, USD/CHF, USD/CAD and
USD/NOK saw their fair value increase to 117.2, 0.995, 1.339 and 8.26 in
Q324 from 116.4, 0.976, 1.324 and 7.99 in Q224, respectively, while
USD/SEK saw it fair value fall to 8.94 in Q324 from 9.18 in Q224.

Some G10 currencies are still looking very cheap vs the EUR/USD looks undervalued relative to PPP and VALFeX
USD while the CHF is still looking very expensive
15% 1.6
10% 1.5
5% 1.4
0%
1.3
-5%
1.2
-10%
1.1
-15%
-20% 1.0
-25% 0.9
-30% 0.8
CHF GBP NZD EUR CAD AUD SEK JPY NOK Mar-00 Mar-04 Mar-08 Mar-12 Mar-16 Mar-20 Mar-24
Misvaluation vs PPP Misvaluation vs VALFeX EUR/USD PPP VALFeX

Source: Crédit Agricole CIB, Bloomberg Source: Crédit Agricole CIB, Bloomberg

The JPY looks very undervalued relative to VALFeX and GBP/USD trades not far from VALFeX but looking
PPP undervalued relative to PPP
2.1
150 2.0
1.9
130 1.8
1.7
1.6
110
1.5
1.4
90 1.3
1.2
70 1.1
Mar-00 Mar-04 Mar-08 Mar-12 Mar-16 Mar-20 Mar-24 Mar-00 Mar-04 Mar-08 Mar-12 Mar-16 Mar-20 Mar-24
USD/JPY PPP VALFeX GBP/USD PPP VALFeX

Source: Crédit Agricole CIB, Bloomberg Source: Crédit Agricole CIB, Bloomberg

21
FX Weekly 21 February 2025 (07:41 CET)

The CHF looks overvalued relative to PPP and VALFeX USD/CAD looks overvalued relative to PPP but less so
relative to VALFeX
1.8
1.6
1.6
1.4
1.4
1.2
1.2

1.0 1.0

0.8 0.8
Mar-00 Mar-04 Mar-08 Mar-12 Mar-16 Mar-20 Mar-24 Mar-00 Mar-04 Mar-08 Mar-12 Mar-16 Mar-20 Mar-24
USD/CHF PPP VALFeX USD/CAD PPP VALFeX

Source: Crédit Agricole CIB, Bloomberg Source: Crédit Agricole CIB, Bloomberg

The AUD looks undervalued relative to VALFeX and PPP The NZD looks undervalued relative to PPP but trades in
line with VALFeX
1.1 0.9
1.0 0.8
0.9 0.7
0.8
0.6
0.7
0.5
0.6
0.5 0.4

0.4 0.3
Mar-00 Mar-04 Mar-08 Mar-12 Mar-16 Mar-20 Mar-24 Mar-00 Mar-04 Mar-08 Mar-12 Mar-16 Mar-20 Mar-24
AUD/USD PPP VALFeX NZD/USD PPP VALFeX

Source: Crédit Agricole CIB, Bloomberg Source: Crédit Agricole CIB, Bloomberg

The SEK looks undervalued relative to VALFeX and PPP The NOK looks undervalued relative to VALFeX and PPP
11 11
10 10
9
9
8
8
7
7
6
5 6

4 5
Mar-00 Mar-04 Mar-08 Mar-12 Mar-16 Mar-20 Mar-24 Mar-00 Mar-04 Mar-08 Mar-12 Mar-16 Mar-20 Mar-24
USD/NOK PPP VALFeX USD/SEK PPP VALFeX

Source: Crédit Agricole CIB, Bloomberg Source: Crédit Agricole CIB, Bloomberg

22
FX Weekly 21 February 2025 (07:41 CET)

FX Risk Index
This is our weekly update published 19 February 2025 For more information please refer to
 At 0.07 (vs 0.17 last week) our Risk Index has retreated from risk averse the FX Focus – Introducing the new
to neutral territory. The trend in the Index remains lower. CACIB FX risk index

 Risk is remaining surprisingly resilient. Investor hopes of an end to the

Russia-Ukraine war is continuing to help sentiment. US President Donald
Trump’s tariff rhetoric also appears to be having less of an effect on
sentiment. The President recently threatened 25% tariffs on automobile,
semiconductor and pharmaceutical imports as soon as 2 April. While
Trump has previously threatened tariffs on auto parts, steel and
aluminium as well as reciprocal tariffs, his most recent announcement
represents a potential broadening in his trade war.

 Investors appear to be increasingly viewing Trump’s tariff threats as

negotiating tactics. Indeed, the President indicated he wanted to give
companies time to relocate to the US before announcing new tariffs.

 Investors are also feeling cautiously upbeat on China. The rally in

Chinese assets following DeepSeek’s debut has been encouraged this
week be a meeting between China’s President Xi Jinping and local
company CEOs. The high proportion of technology CEOs at the meeting
has buoyed investor hopes of looser regulation of China’s tech sector.
The NPC in early March will be closely watched by investors.

 All components bar commodity prices weighed on our Risk Index over
the past week. Falling equity and FX market volatility as well as
sovereign-EM spreads were the largest contributors to the fall in Index.

 So far in 2025, the NZD and EUR have the strongest negative correlations
with our Risk Index. The NOK and JPY have the strongest positive
correlations with the Index.

CACIB FX Risk Index

4.50

3.50

2.50

1.50

0.50

-0.50

-1.50
Aug-18 Feb-19 Aug-19 Feb-20 Aug-20 Feb-21 Aug-21 Feb-22 Aug-22 Feb-23 Aug-23 Feb-24 Aug-24
CACIB FX Risk Index MA (100)

Source: Crédit Agricole CIB

Currency sensitivity Yield advantage

1.00 5.00
4.50
4.00
0.50 3.50
3.00
0.00 2.50
2.00
1.50
-0.50 1.00
0.50
-1.00 0.00
NOK JPY CAD SEK GBP CHF USD AUD NZD EUR GBP USD NOK AUD NZD CAD EUR SEK JPY CHF
2024 2025

Source: Bloomberg, Crédit Agricole CIB Source: Bloomberg, Crédit Agricole CIB

23
FX Weekly 21 February 2025 (07:41 CET)

Contribution of components Gold & Risk Index

4.50 2900
Commodity
3.50 2700
Credit Spread
2500
2.50
Utilities/Financials 2300
1.50
FX Volatility 2100
0.50
1900
Sovereign - EM
-0.50 1700
Equity Volatility
-1.50 1500
-6 -5 -4 -3 -2 -1 0 1 2 Dec-20 Dec-21 Dec-22 Dec-23 Dec-24
CACIB FX Risk Index Gold (USD/oz, rhs)

Source: Bloomberg, Crédit Agricole CIB Source: Bloomberg, Crédit Agricole CIB

24
FX Weekly 21 February 2025 (07:41 CET)

Key releases in the week ahead

GMT Indicator/Event For Cons. Prev. Comment

Monday 24 February
09:00 GE IFO - Business Climate Feb 85.10
09:00 UK BOE's Lombardelli Speaks
10:00 EZ CPI YoY Jan 2.50%
13:15 UK BoE's Ramsden Speaks
15:30 US Dallas Fed Manufacturing Feb 14.10%
18:00 UK BoE's Dhingra Speaks
23:50 JN PPI Services YoY Jan 2.90%
Tuesday 25 February
02:45 AU RBA’s Jones - Fireside Chat
05:00 EZ New Cars Jan 5.10%
05:30 NO Consumer Confidence 1Q -14.40
05:30 JN Tokyo Dpt Store Sales YoY Jan 1.60%
06:00 JN Machine Tool Orders YoY Jan 4.70%
07:00 GE GDP YoY 4Q -0.40%
09:20 US Fed's Logan Speaks at Balance Sheet Conference
10:00 EZ Bundesbank Chief Nagel Presents Annual Report
11:00 UK CBI Reported Sales Feb -24.00
13:00 EZ ECB's Schnabel Speaks in London
14:00 UK BoE's Pill Speaks
14:00 US FHFA House Price Dec 0.30%
14:00 US S&P/CS Compo-20 YoY Dec 4.33%
15:00 US Richmond Fed Manufacturing Feb -4
15:00 US Conf. Board Consumer Conf. Feb 102.80 104.10
16:45 US Fed’s Barr Gives Remarks with Q&A
18:00 US Fed’s Barkin Speaks on Inflation
Wednesday 26 February
00:30 AU Construction 4Q 1.60%
05:00 JN Leading Index Dec 108.90
07:00 NO Credit Indicator Growth YoY Jan 3.30%
07:00 SW Prod Price Jan 2.00%
07:00 GE GfK Consumer Confidence Mar -22.40
07:45 FR Consumer Confidence Feb 92.00
15:00 US New Home Sales Jan 690 K 698 K
16:30 UK BoE's Dhingra Speaks
17:00 US Fed's Bostic Speaks on Economic Outlook, Housing
21:00 AU RBA’s Plumb – Speech
Thursday 27 February
00:00 GE Retail Sales YoY Jan 1.80%
00:00 NZ NBNZ Activity Outlook Feb 45.8
00:00 NZ Bus. Conf Feb 54.4
00:30 AU Private Capital Expenditure 4Q 1.10%
07:00 SW Lending Jan 1.57%
07:00 SW Trade Balance Jan 6.20 B
08:00 SW Eco Tendency Feb 97.70
08:00 SZ GDP 4Q 2.00%
09:00 EZ Money Supply Jan 3.50%
09:00 IT Consumer Confidence Feb 98.20
10:00 EZ Eurozone Economic Confidence Feb 95.20
12:30 EZ ECB Publishes Account of Jan. 29-30 Policy Meeting
13:30 US Durable Goods Orders Jan 1.70% -2.20%
13:30 US Core PCE 4Q S 2.50%
13:30 US Personal Consumption 4Q S 4.20%
13:30 US GDP QoQ 4Q S 2.30% 2.30%

25
FX Weekly 21 February 2025 (07:41 CET)

GMT Indicator/Event For Cons. Prev. Comment

15:00 US Pending Home Sales Jan -5.48%
16:00 US Kansas City Fed Feb -5.00
18:15 US Fed's Hammack Gives Keynote Speech at Conference
20:15 US Fed’s Harker Gives Speech on Economic Outlook
23:30 JN Tokyo CPI YoY Feb 3.40%
23:50 JN Industrial Production YoY Jan -1.60%
23:50 JN Retail Sales YoY Jan 3.50%
Friday 28 February
00:30 AU Private Sector Credit YoY Jan 6.50%
05:00 JN Housing Starts Jan -2.52%
07:00 NO Retail Sales MoM Jan -0.10%
07:00 SW Retail Sales YoY Jan 5.58%
07:00 SW Earnings Dec 4.18%
07:00 NO Unemployment Feb 2.30%
07:00 SW GDP 4Q 0.70%
07:00 UK BOE's Ramdsden Speaks
07:00 UK Nat'wide House prices MoM Feb 0.10%
07:30 SZ Retail Sales Jan 2.60%
07:45 FR Consumer Spending MoM Jan 0.70%
07:45 FR GDP YoY 4Q 0.70%
07:45 FR CPI YoY Feb 1.70%
08:00 SZ KOF Leading Indicator Feb 101.60
08:55 GE Unemployment Feb 6.20%
08:55 GE Unemployment Change Feb 11 K
09:00 NO FX Purchases Mar 300.0M
09:00 EZ ECB 3 Year CPI Expectations Jan 2.40%
09:00 EZ ECB 1 Year CPI Expectations Jan 2.80%
10:00 IT IT CPI NIC Incl Tobacco YoY NSA Feb 1.50%
10:00 IT Italian HICP MoM Feb -0.70%
13:00 GE CPI YoY Feb 2.80%
13:30 US Wholesale Inventories Jan -0.50%
13:30 US Personal Income MoM Jan 0.30% 0.40%
13:30 US Personal Spending Jan 0.30% 0.70%
13:30 US Core PCE Deflator YoY Jan 2.60% 2.79%
13:30 CA GDP Dec 1.50%
14:45 US Chicago PMI Feb 39.50

Source: Bloomberg, Crédit Agricole CIB

26
FX Weekly 21 February 2025 (07:41 CET)

Exchange rate forecasts

19-Feb Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26 Sep-26 Dec-26
USD Exchange rate
Industrialised countries
Euro EUR/USD 1.04 1.05 1.04 1.05 1.07 1.07 1.08 1.09 1.10
Japan USD/JPY 151.5 150.0 148.0 146.0 148.0 147.0 146.0 146.0 145.0
United Kingdom GBP/USD 1.26 1.26 1.25 1.28 1.30 1.30 1.32 1.34 1.36
Switzerland USD/CHF 0.90 0.89 0.90 0.90 0.91 0.91 0.90 0.90 0.89
Canada USD/CAD 1.42 1.41 1.39 1.37 1.35 1.33 1.32 1.31 1.30
Australia AUD/USD 0.63 0.62 0.63 0.64 0.65 0.67 0.68 0.70 0.70
New Zealand NZD/USD 0.57 0.57 0.58 0.58 0.60 0.61 0.62 0.64 0.64
Euro Cross rates
Industrialised countries
Australia EUR/AUD 1.64 1.69 1.65 1.64 1.65 1.60 1.59 1.56 1.57
Canada EUR/CAD 1.5 1.481 1.446 1.439 1.445 1.423 1.426 1.428 1.4
Japan EUR/JPY 157.86 157.50 153.92 153.30 158.36 157.29 157.68 159.14 159.50
New Zealand EUR/NZD 1.8 1.842 1.793 1.810 1.783 1.754 1.742 1.703 1.7
Norway EUR/NOK 11.60 11.40 11.30 11.20 11.00 10.80 10.60 10.50 10.40
Singapore EUR/SGD 1.4 1.418 1.425 1.439 1.455 1.455 1.458 1.461 1.5
Sweden EUR/SEK 11.18 11.50 11.40 11.30 11.10 10.90 10.80 10.70 10.60
Switzerland EUR/CHF 0.94 0.93 0.94 0.95 0.97 0.97 0.97 0.98 1.0
United Kingdom EUR/GBP 0.83 0.83 0.83 0.82 0.82 0.82 0.82 0.81 0.81
Asia
China USD/CNY 7.28 7.35 7.50 7.48 7.45 7.40 7.45 7.45 7.40
Hong Kong USD/HKD 7.78 7.78 7.77 7.76 7.75 7.76 7.76 7.77 7.77
India USD/INR 86.89 86.00 87.00 86.75 86.75 86.50 86.50 86.50 86.25
Indonesia USD/IDR 16330 16100 16300 16200 16000 16000 15800 15600 15500
Malaysia USD/MYR 4.44 4.60 4.70 4.60 4.60 4.60 4.70 4.70 4.50
Philippines USD/PHP 58.1 59.5 60.0 59.8 59.2 59.0 58.8 58.5 58.0
Singapore USD/SGD 1.34 1.35 1.37 1.37 1.36 1.36 1.35 1.34 1.33
South Korea USD/KRW 1439 1460 1460 1440 1420 1410 1400 1390 1370
Taiwan USD/TWD 32.7 32.8 33.3 33.2 32.8 33.0 32.8 32.8 32.6
Thailand USD/THB 33.7 35.8 36.2 36.1 36.1 36.1 36.0 35.9 35.8
Vietnam USD/VND 25515 25800 26000 26100 26100 26000 26000 25800 25800
Latin America
Brazil USD/BRL 5.72 5.70 5.80 5.90 6.00 6.00 6.00 6.00 6.00
Chile USD/CLP 950.00 990.00 1010.00 1030.00 1050.00 1045.00 1040.00 1035.00 1030.00
Colombia USD/COP 4096.50 4450.00 4500.00 4550.00 4600.00 4650.00 4700.00 4750.00 4800.00
Mexico USD/MXN 20.43 20.75 21.00 21.25 21.50 21.75 22.00 22.25 22.50
Peru USD/PEN 3.69 3.85 3.90 3.95 4.00 4.00 4.00 4.00 4.00
Africa
South Africa USD/ZAR 18.51 18.00 17.80 17.70 17.50 17.40 17.40 17.60 17.70
Emerging Europe
Poland USD/PLN 4.00 3.98 4.04 4.00 3.93 3.92 3.87 3.83 3.78
Russia USD/RUB 89.62 94.00 95.00 96.00 96.00 96.00 96.00 96.00 96.00
Turkey USD/TRY 36.27 37.00 38.10 39.00 39.70 40.30 40.70 41.10 41.50
Central Europe
Czech Rep. EUR/CZK 25.09 25.10 25.20 25.00 24.80 24.60 24.50 24.40 24.30
Hungary EUR/HUF 401 403 403 395 385 380 370 368 365
Poland EUR/PLN 4.17 4.18 4.20 4.20 4.20 4.19 4.18 4.17 4.16
Romania EUR/RON 4.97 4.98 4.98 4.98 4.98 4.98 4.98 4.98 4.98

Source: Crédit Agricole CIB

27
FX Weekly 21 February 2025 (07:41 CET)

Economic forecasts
Real GDP (YoY. %) CPI (YoY. %) Current Account (% GDP)
24 25 26 24 25 26 24 25 26

USA 2.7 1.9 2.2 2.9 2.4 2.5 -3.6 -3.5 -3.5
JAPAN -0.2 0.7 1.0 2.4 1.8 1.0 4.0 2.5 2.0
EUROZONE 0.7 1.0 1.2 2.4 2.0 1.7 2.5 2.5 2.5
Belgium 1.0 1.3 1.5 4.3 2.9 1.9 -0.3 -0.2 -0.2
France 1.1 0.8 1.1 2.3 1.2 1.5 0.3 1.5 1.5
Germany -0.2 0.2 0.8 2.5 2.1 2.0 6.7 6.4 6.0
Italy 0.5 0.6 0.9 1.1 1.7 1.2 1.6 2.4 2.6
Netherlands 0.9 1.6 1.5 3.2 2.5 2.2 9.6 10.1 10.1
Spain 3.1 2.4 1.8 2.9 2.3 1.7 2.5 0.9 1.5
Other developed countries
Australia 1.2 2.1 2.2 3.3 3.3 3.0 -0.9 -1.1 -1.3
Canada 1.1 1.8 1.9 2.4 2.0 2.0 -0.8 -1.0 -0.9
New Zealand 0.0 1.9 2.4 2.7 2.2 2.1 -6.3 -5.0 -4.5
Norway 0.9 1.3 1.4 3.2 2.7 2.9 18.3 17.4 16.5
Sweden 0.5 1.2 1.8 2.9 1.7 1.9 7.9 4.4 4.3
Switzerland 1.3 1.3 1.8 1.3 1.0 1.0 8.2 7.6 8.0
United Kingdom 0.8 1.2 1.5 2.5 2.2 2.0 -3.0 -1.2 -2.2
Asia 5.1 4.5 4.5 1.7 1.7 2.1 1.6 1.3 1.1
China 5.0 4.2 3.9 0.2 0.5 1.0 1.5 1.0 0.8
Hong Kong 2.5 2.3 2.2 1.8 2.5 2.2 11.3 10.7 10.0
India 6.8 6.3 6.7 4.5 4.0 4.7 -1.4 -1.6 -1.7
Indonesia 5.1 5.0 5.1 2.4 2.6 2.7 -0.8 -1.0 -1.2
Korea 2.1 1.6 2.1 2.3 2.0 2.0 4.9 4.8 4.9
Malaysia 4.5 4.2 4.3 2.2 2.3 2.2 2.4 2.0 2.5
Philippines 5.6 6.0 6.1 3.2 2.6 3.2 -3.5 -3.5 -2.9
Singapore 3.7 2.4 2.5 2.5 2.3 2.2 19.7 18.8 19.3
Taiwan 4.2 2.6 2.5 2.2 1.9 1.8 14.8 13.0 12.2
Thailand 2.6 2.8 2.7 0.4 1.4 1.2 2.2 2.8 3.2
Vietnam 6.4 6.1 6.0 3.6 3.2 3.3 4.5 5.6 4.1
Latin America 2.4 2.2 2.3 3.9 3.3 2.9 -1.4 -1.6 -1.8
Brazil 3.4 1.8 2.2 4.5 3.8 3.5 -2.6 -2.2 -2.5
Chile 2.3 2.2 2.4 4.2 3.6 3.1 -2.4 -2.5 -2.8
Colombia 1.8 2.4 2.5 6.6 4.2 3.2 -2.5 -2.7 -2.6
Mexico 1.5 1.2 1.8 4.7 3.8 3.3 -0.6 -0.7 -0.9
Peru 2.6 2.5 2.3 2.5 2.3 2.1 0.3 -0.2 -0.5
Emerging Europe 2.8 2.2 2.1 6.7 5.5 4.4 1.3 0.9 0.8
Czech Republic 1.0 2.6 2.4 2.5 2.2 2.0 1.6 1.2 0.6
Hungary 0.7 2.9 3.1 3.6 3.7 3.0 1.5 0.6 0.6
Poland 2.6 3.5 3.3 3.7 3.9 2.8 0.3 0.2 0.1
Romania 1.1 3.5 2.9 5.6 3.9 3.3 -6.9 -6.4 -6.0
Russia 3.5 1.5 1.5 8.5 6.8 5.5 2.7 2.2 2.1
Turkey 3.0 3.0 3.2 60.1 28.0 17.0 -1.5 -1.5 -1.5
Africa & Middle East 2.0 3.3 3.4 13.0 10.6 9.0 1.3 0.8 0.8
Algeria 3.8 3.0 2.7 5.3 5.2 4.8 1.3 -0.5 -1.5
Egypt 2.4 3.0 4.4 33.3 21.0 14.0 -6.6 -6.4 -5.1
Iran 3.7 3.0 2.7 32.0 30.0 28.0 2.9 2.8 2.8
Kuwait -2.7 3.0 2.5 3.0 2.5 2.2 28.0 24.0 22.0
Morocco 2.5 3.0 3.2 6.1 2.5 2.4 -2.1 -2.6 -2.9
Qatar 1.5 1.8 5.0 1.0 1.5 1.3 13.5 13.0 16.0
Saudi Arabia 0.8 4.2 4.0 1.7 2.3 2.1 0.0 -0.8 -1.2
South Africa 0.4 1.7 1.3 4.4 4.3 4.4 -1.9 -2.2 -2.3
Tunisia 1.3 1.5 1.5 7.1 6.8 6.8 -3.5 -3.4 -3.5
United Arab Emirates 4.0 5.0 4.5 2.2 2.2 2.2 8.5 8.0 7.5
Total 3.0 2.8 2.9 4.4 3.3 3.0 0.5 0.3 0.2
Industrialised countries 1.5 1.4 1.7 2.6 2.2 2.0 -0.2 -0.2 -0.4
Emerging countries 4.2 3.8 3.8 5.7 4.2 3.7 1.1 0.7 0.6
Notes:
(1) CPI – for UK: HICP; for Brazil: IPCA
(2) India – fiscal year ending in March

Source: Crédit Agricole CIB

28
FX Weekly 21 February 2025 (07:41 CET)

Interest rate forecasts – developed countries

19-Feb Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26 Sep-26 Dec-26
EUR
Refi rate 2.90 2.65 2.40 2.40 2.40 2.40 2.40 2.40 2.40
Depo rate 2.75 2.50 2.25 2.25 2.25 2.25 2.25 2.25 2.25
ESTR 2.67 2.43 2.18 2.19 2.20 2.20 2.20 2.20 2.20
3M Euribor 2.53 2.32 2.23 2.26 2.27 2.28 2.29 2.30 2.31
Germany
2Y 2.17 2.20 2.10 2.15 2.25 2.20 2.20 2.25 2.20
5Y 2.31 2.25 2.20 2.30 2.35 2.30 2.45 2.50 2.55
10Y 2.54 2.40 2.40 2.60 2.55 2.55 2.70 2.75 2.80
30Y 2.79 2.50 2.65 2.75 2.75 2.85 2.95 3.00 3.10
France
2Y 2.31 2.45 2.30 2.35 2.40 2.35 2.35 2.40 2.35
5Y 2.71 2.75 2.65 2.70 2.70 2.65 2.75 2.80 2.85
10Y 3.23 3.15 3.10 3.25 3.15 3.15 3.25 3.30 3.35
30Y 3.80 3.50 3.60 3.65 3.65 3.75 3.90 3.95 4.10
Italy
2Y 2.49 2.65 2.55 2.55 2.60 2.50 2.55 2.60 2.55
5Y 2.94 3.00 2.95 3.00 3.00 2.90 3.10 3.15 3.15
10Y 3.63 3.65 3.55 3.65 3.55 3.50 3.70 3.75 3.75
30Y 4.32 4.05 4.15 4.25 4.15 4.20 4.35 4.40 4.45
Spain
2Y 2.33 2.50 2.35 2.40 2.45 2.40 2.40 2.40 2.35
5Y 2.69 2.70 2.65 2.60 2.65 2.55 2.70 2.70 2.75
10Y 3.21 3.10 3.05 3.20 3.10 3.05 3.20 3.20 3.25
30Y 3.84 3.55 3.65 3.70 3.65 3.70 3.75 3.75 3.80
Ireland
10Y 2.84 2.70 2.65 2.85 2.75 2.75 2.85 2.90 2.90
Portugal
10Y 3.06 2.90 2.85 3.05 2.95 2.95 3.05 3.10 3.10
Greece
10Y 3.43 3.30 3.25 3.45 3.35 3.35 3.45 3.50 3.50
Sweden
Repo 2.25 2.00 2.00 2.00 2.00 2.00 2.00 2.00
Norway
Deposit 4.50 4.25 4.00 3.75 3.50 3.25 3.00 3.00 3.00
EUR swaps
2Y 2.29 2.30 2.25 2.20 2.35 2.40 2.35 2.40 2.35
5Y 2.35 2.35 2.25 2.25 2.40 2.40 2.45 2.50 2.50
10Y 2.46 2.40 2.30 2.25 2.25 2.35 2.45 2.50 2.55
30Y 2.31 2.00 1.95 2.00 2.05 2.15 2.20 2.25 2.30
GBP
Bank Rate 0.00 4.50 4.25 4.00 3.75 3.50 3.25 3.00 2.50
Sonia 0.00 4.45 4.20 3.95 3.69 3.45 3.20 2.95 2.45
Note: 3M rates are interbank, 2Y and 10Y rates are government bond yields

Source: Crédit Agricole CIB

29
FX Weekly 21 February 2025 (07:41 CET)

Interest rate forecasts – developed countries (cont.)

19-Feb Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26 Sep-26 Dec-26
USD
FF target 4.50 4.25 4.00 4.00 4.00 4.00 4.00 4.00 4.00
FF effective 4.33 4.08 3.83 3.83 3.83 3.83 3.83 3.83 3.83
SOFR 4.37 4.07 3.82 3.82 3.82 3.82 3.82 3.82 3.82
USTs
2Y 4.29 4.10 3.90 3.75 3.95 4.05 4.10 4.20 4.25
5Y 4.39 4.10 4.00 3.95 4.25 4.35 4.40 4.50 4.55
10Y 4.54 4.25 4.20 4.20 4.50 4.70 4.80 4.90 4.95
30Y 4.76 4.50 4.45 4.45 4.70 4.90 5.00 5.15 5.25
USD swaps
2Y 4.13 3.90 3.69 3.53 3.72 3.82 3.86 3.96 4.00
5Y 4.09 3.74 3.63 3.57 3.86 3.95 3.99 4.09 4.13
10Y 4.13 3.74 3.68 3.66 3.95 4.14 4.23 4.31 4.35
30Y 4.03 3.65 3.58 3.57 3.80 3.99 4.08 4.21 4.30
JPY
Call rate 0.00 0.50 0.50 0.50 0.50 0.75 0.75 1.00 1.00
JGBs
2Y 0.82 0.70 0.70 0.70 0.90 0.90 0.90 1.20 1.20
5Y 1.08 0.80 0.80 0.90 1.10 1.20 1.30 1.50 1.50
10Y 1.44 1.15 1.15 1.20 1.30 1.50 1.55 1.75 1.75
30Y 2.34 2.20 2.20 2.20 2.20 2.30 2.40 2.50 2.50
Canada
Overnight 0.00 2.75 2.75 2.75 2.75 2.75 2.75 2.75 2.75
Note: 3M rates are interbank, 2Y and 10Y rates are government bond yields

Source: Crédit Agricole CIB

30
FX Weekly 21 February 2025 (07:41 CET)

Global Markets Research contact details

v. 06/09/18 Jean-François Paren Head of Global Markets Research +33 1 41 89 33 95
Asia (Hong Kong, Singapore & Tokyo) Europe (London & Paris) Americas (New York)
Takuji Aida Ken Matsumoto Louis Harreau Valentin Giust Nicholas Van Ness **
Chief Economist Japan Macro Strategist Japan Head of Developed Markets Global Macro Strategist US Economist
Strategy

+81 3 4580 5360 +81 3 4580 5337 Macro & Strategy +33 1 41 89 30 01 +1 212 261 7601
Macro

+33 1 41 89 98 95

Bert Lourenco Jean-François Perrin Alex Li **

Head of Rates Research Senior Inflation Strategist Head of US Rates Strategy
+44 (0) 20 7214 6474 +33 1 41 89 73 49 +1 212 261 3950
Guillaume Martin Matthias Loise
Interest Rates

Interest Rates Strategist Inflation Strategist

+33 1 41 89 37 66 +33 1 41 89 20 06
Riccardo Lamia
Interest Rates Strategist
+33 1 41 89 63 83

Xiaojia Zhi Jeffrey Zhang Sébastien Barbé Olga Yangol **

Chief China Economist Emerging Market Strategist Head of Emerging Market Research & Strategy Head of Emerging Market
Emerging Markets

Head of Research, Asia +852 2826 5749 +33 1 41 89 15 97 Research & Strategy,
ex-Japan Americas
+852 2826 5725 +1 212 261 3953
Yeon Jin Kim
Eddie Cheung CFA Emerging Market Analyst
Senior Emerging Market +852 2826 5756
Strategist
+852 2826 1553
David Forrester Valentin Marinov Alexandre Dolci
Senior FX Strategist Head of G10 FX Research & FX Strategist
Exchange

+65 6439 9826 Strategy +44 20 7214 5064

Foreign

+44 20 7214 5289

Alexandre Borel
Research

Data Scientist
+33 1 57 87 34 27
Quant

** employee(s) of Crédit Agricole Securities (USA), Inc.

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The views expressed in this report accurately reflect the personal views of the undersigned analyst(s). In addition, the undersigned analyst(s) has not and will not receive
any compensation for providing a specific recommendation or view in this report.

Valentin Marinov, David Forrester, Alexandre Dolci

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MiFID II contact details

Andrew Taylor Please send your questions on
MiFID II Research contact MiFID II to:
andrew.taylor@ca-cib.com research.mifid2@ca-cib.com

31
FX Weekly 21 February 2025 (07:41 CET)

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