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    Losers and winners after Bremain - Nomura Ross J Burland

    Analysts at Nomura explained that they judge JPY and CHF will be losers among G10 FX, if Brexit is avoided, as they expect (main scenario).Key Quotes:"Although USD/JPY reaction this week is not encouraging, we would still expect USD/JPY to quickly test 105.0. Short-term overshooting to 107-108 is possible, while the pair is likely to be in the 105.00-106.50 range by the end of Friday. A EUR recovery against CHF is also likely after a Bremain outcome. Even though CHF has been trading resiliently recently, latest flow data show mid-term flows remain CHF negative.As safehaven demand diminishes, we expect EUR/CHF to recover to 1.10. The sensitivity analysis does not show a clear difference between EUR and USD, but we judge initial reaction of EUR/USD to Bremain will be EUR appreciation against USD. As the biggest European risk event passes, EUR is likely to initially react positively to the recovery in risk sentiment, as the recent correlation suggests. We believe EUR appreciation against USD is unlikely to sustain for the medium term though and selling on a rally would be attractive.The latest sensitivity analysis shows that SEK could also perform more weakly against EUR, but we expect EUR to actually depreciate against SEK if Brexit is avoided. The next Riksbank meeting is scheduled on 6 July and the Bank is unlikely to ease its monetary policy barring a Brexit.Uncertainty on the outcome of the UK referendum has been weakening SEK and the trade weighted index (KIX) is now trading at weaker level than the Riksbank’s forecast. We expect gradual EUR depreciation against SEK to resume after Bremain, and the currency pair is likely to break 9.30 swiftly after a Bremain outcome. Although the reaction of oil prices to a Bremain outcome is the key factor, NOK outperformance among European G10 FX (excluding GBP) is also likely as suggested from the recent sensitivity. Norges Bank is scheduled to have a meeting tomorrow morning and the Bank’s policy stance can be slightly more hawkish. The more optimistic policy stance of Norges Bank amid a recovery in oil prices can accelerate NOK appreciation momentum after a Bremain. We would also expect the strong performance of commodity currencies (AUD, NZD and CAD) against USD to accelerate immediately after a Bremain, while the market’s focus would shift to fundamental factors, such as central bank policy stances and Chinese economic momentum."

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