Currencies

We apply a systematic approach to investing based on economic, inflation, and monetary policy surprises to the foreign exchange market. The signals from this framework are broadly consistent with the tactical views of our FX strategists, which anticipate a pause in the USD’s decline and a partial reversal of the recent euro strength. 

Our latest report analyzes home bias in bonds and equities across 15 countries. The verdict? 

Hedged international bonds outperform domestic peers, especially during high inflation. In equities, even top markets like the US have had multi-year periods of underperformance. Allocators should leave patriotism aside when running their portfolios.

In this chartbook, we look at the balance of payments across DM and EM countries. The US does not fare well, but neither do a few other countries.