Currencies In-Depth
Highlights The dollar is likely to churn on recent weakness before a cyclical bear market fully unfolds. The reason is that the economic landscape remains fraught with uncertainty, both politically and economically. We continue to recommend a barbell strategy. Hold a basket of the cheapest…
Highlights When it comes to a beauty contest among currencies, the US dollar is a winner right now. Significant dollar moves tend to occur in very long cycles. When – and only when – the crisis ends will the dollar begin to surrender to significant headwinds. The transition from a stronger to…
Highlights Competitive devaluation will remain the dominant policy landscape in the near term. This means that paradoxically, currencies with high and/or positive long-term interest rates remain at risk. The CAD may be the next shoe to drop. Crude oil may have put in a structural bottom, but…
Highlights Oil prices are up strongly from their lows, but conditions for a durable bottom may not yet be in place. The main hiccup is that an air pocket will likely remain under global oil demand until most social-distancing measures are lifted. That said, most petrocurrencies offer a…
Highlights The Federal Reserve’s temporary FIMA repo facility will go a long way in helping ease dollar-funding stress outside the US. However, with the duration of the lockdown highly uncertain, a liquidity crisis could rapidly evolve into a solvency one. If the containment measures prove…
Dear clients, In addition to this short weekly report, you will also receive a Special Report penned by my colleague Jonathan LaBerge on Sweden, with implications for the SEK. I hope you will find the report both useful and insightful. In the interim, I wish safety for you and your families.…
Highlights The near-term path for the DXY remains up. Uncertainty about the trajectory of global growth is a potent tailwind. Central bank ammunition will eventually put a floor under global growth, but it remains a powerless weapon until animal spirits are revived. The signal on when to sell…
Highlights We expect both the Australian dollar and Chinese RMB to move higher in the coming months. A key catalyst is broad-based weakness in the US dollar. The composition of goods benefiting from the US-China Phase I deal are a small portion of Australia’s export basket, limiting…
Highlights Remain short the DXY index. The key risk to this view is a US-led rebound in global growth, or a pickup in US inflation that tilts the Federal Reserve to a relatively more hawkish bias. Stay long a petrocurrency basket. The latest flare-up in US-Iran tensions is just a call option…
Dear Client, In addition to this short weekly report, you will also receive a Special Report on investment themes over the next decade, penned by our colleagues in the US Equity Strategy and Geopolitical Strategy services. The implications for the dollar could be profound, and I hope you will…