Kit Juckes, Research Analyst at Societe Generale, suggests that a moderate bounce in oil prices was one of their calls at the end of last year, as was further uncertainty about Chinese currency policy in the face of continued economic softness. Key Quotes “Just because Chinese markets have calmed down since the start of the Chinese New Year doesn’t mean this theme has gone away for good. And likewise, just because Brent crude is trading at US$2/bbl lower than it was at the end of 2015 doesn’t mean we’re giving up on the notion of a modest rise during 2016 as a whole. In G10, our concerns about China and our view that oil prices should find a bottom in early 2016 was reflected in a short NZD/CAD recommendation. We look for that trade to perform well in the remainder of 2016 after gaining 3.8% so far this year. We expect China to undermine the whole Asian currency block in emerging and developed market currencies even if our forecasts of the actual USD/CBY move itself are limited to a further 4% between now and December. The oil bounce, as well as helping the CAD recover a little further ground this year against the dollar, drives our forecasts for the RUB, MXN, and NOK all outperforming the dollar between now and year’s end, though the obvious caveat is that the recovery in oil prices is likely to be modest and day-to-day volatility significant. FX markets have been over-correlated with oil prices of late, and the oil market’s volatility is down to it being treated as a financial asset as much as a physical commodity. That’s a recipe for choppy markets and a challenge for positioning that won’t go away.” For more information, read our latest forex news.