Currencies In-Depth
Highlights We agree with the market consensus that the long-term dollar outlook is bearish, but caution against chasing the dollar lower in the short term. While the election results remain uncertain, currency markets also continue to ignore risks of a no-deal Brexit and significant escalation…
Your feedback is important to us. Please take our client survey today. Highlights The long-term outlook for the dollar is bearish, but fresh shorts could be offside over the next one to three months. An uptick in US political uncertainty adds to our bullish dollar view over the next month.…
Highlights Currency markets remain vulnerable to the upcoming US election, Brexit, and a resurgence of Covid-19 infections. Meanwhile, President’s Trump suggested “piecemeal” fiscal deal increases the odds of a correction in the near term. Stay short USD/JPY as a core holding. We eventually…
Highlights Most sentiment and technical indicators suggest the dollar is undergoing a countertrend bounce rather than entering a new bull market. However, the internal dynamics of financial markets remain short-term constructive for the DXY. The DXY could rise to 96 before working off oversold…
Highlights While the bull market in the Australian dollar might pause temporarily, it will advance further this cycle. The key catalyst for the AUD is an improving balance-of-payments backdrop. Despite its explosive rise, the majority of our models still show the Aussie as relatively cheap.…
Highlights We remain bearish on the US dollar over the next 12 months. The best vehicle to express this view continues to be the Scandinavian currencies (NOK and SEK). Precious metals remain a buy so long as the dollar faces downside. However, we remain more bullish on silver than gold. Go…
Dear clients, The Foreign Exchange Strategy will take a summer break next week. We will resume our publication on September 4th. Best regards, Chester Ntonifor, Vice President Foreign Exchange Strategy Feature The economy of Hong Kong SAR1 has been held under siege by two tectonic forces.…
Highlights The dollar is on the verge of a significant breakdown. If the DXY punches through 94, it will likely mark the beginning of a structural bear market. The most recent catalyst – fiscal support in the euro zone – has been good news on the “anti-dollar” front. Agreement on the EU…
Highlights Should the DXY fail to breach below 92 in the coming months, momentum will be a risk to our short dollar positions. Another risk is valuation. The trade-weighted dollar is expensive, but not overly so. It is not especially expensive versus the euro and some commodity currencies. A…
Highlights Historically, when global growth picks up, the yen weakens. But this is less likely in an environment where global yields remain anchored at low levels. Meanwhile, there is rising risk that consumption in Japan will remain muted. This will limit any pickup in domestic inflation. A…