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FICC | Currencies
Tactical and strategic guidance on all major DM and EM currencies. Typically published twice a month.
Goldilocks, with fault lines underneath. Our first joint FICC outlook lays out where growth, inflation, and policy are headed this quarter and where the calm could crack.
The dollar has had a strong run but its key supports from Fed repricing, positioning, and terms of trade are starting to fade. We close our tactical long USD positions and turn to short USD/JPY, where intervention risk makes yen shorts look increasingly dangerous.
Rising volatility in Korean markets captures a late-cycle surge in which euphoria and drawdown risk are rising together. While KOSPI momentum remains intact, the bigger opportunity may be emerging in the increasingly mispriced KRW, which could rally meaningfully as portfolio flow headwinds fade.
The dollar's muted response to the Iran conflict has led many to question its safe-haven appeal. We argue the opposite – the dollar's defensive properties have returned, while improving growth and rate dynamics should underpin further USD strength in the months ahead.
MoF FX intervention has drawn a line at 160, triggering a sharp yen squeeze. But with near-term fundamentals still stacked against the currency, USD/JPY remains poised to retest the highs before any durable turn.
Central banks remain on hold amid heightened uncertainty. We rely on BCA’s Central Bank Monitors to assess the current policy stance of major central banks, and highlight the tactical opportunities across bond markets and currencies.
The dollar’s pullback masks a quiet improvement in its cyclical backdrop, with growth, monetary policy, and flows turning in its favor. As markets fully price out geopolitical risk, the USD should decouple from oil and better reflect these gains, despite lingering structural headwinds.