SLI's GARS fund backs overvalued euro to tumble

Standard Life Investments' £8bn Global Absolute Return Strategies (GARS) Fund has initiated new pair trades for the third quarter in expectation of euro weakness, higher Eurozone inflation and resilient commodity prices.

SLI's team has initiated a relative value trade, pairing the euro with the Norwegian krone, after warning the single currency is overvalued. "The euro currency remains too expensive and is vulnerable to the ongoing regional peripheral crisis," the team said in a strategy note. Despite the crisis in Greece and mounting concerns about the state of other peripheral economies - including Portugal, Ireland and Spain - the single currency has strengthened against the dollar this year. The euro has risen from $1.30 in early January to a peak of $1.49 in April and remains around $1.45 this...