Currencies In-Depth
In this note, we reaffirm our underweight position in JGBs and long yen positions given the BoJ’s meeting overnight.
In this FX note, we provide a rationale for why it is important to pay attention to technical indicators, while still keeping your eyeball on the structural factors that drive currencies. This report answers the following questions: 1. Should you buy or sell the USD over a three-to-six month period from the pure lens of our proven technical indicators and 2. What are the best tactical cross trades among currencies.
This Insight looks at the implications of the RBNZ’s rate cut on New Zealand assets.
This week’s report looks at Japan, with the recent BoJ meeting. While a trade war has injected uncertainty into the Japanese economy, our conviction remains high that JGBs will underperform other government bond markets, and the yen will ultimately rally. That said, JPY is due for a tactical pullback.
Following the escalation of the US-China trade war, the Reserve Bank of Australia is priced to cut rates most aggressively among its G10 peers. Across the Tasman Sea, the Reserve Bank of New Zealand has already cut rates aggressively, but the economy has yet to respond to this policy easing. This Special Report will examine the prospects of monetary policy for both of these central banks.
This week, we look at the sustainability of the HKD peg as the next whale to move markets, given what is happening to tariffs. After careful analysis, our bias is that it is here to stay. With the DXY dipping below 100, we are likely to see a rebound, which is actually bad news for the Hong Kong region of China, since it will tighten financial conditions. We have no new short-term trades, but if the peg broke, you want to be short HKD/JPY.
This report looks at investment implications, for Norwegian assets, given the recent meeting, from the Norges Bank.
Given the meetings between the Bank of Japan, the Bank of England, and the Swiss National Bank, our highest convictions views are:
Overweight UK Gilts. It is also time to sell sterling. We are short sterling, as of 1.30.
Underweight JGBs. Correspondingly, be long the yen.
A short CHF/JPY position remains a core holding. Selling GBP/JPY is also a great trade.
This report is our Part III series on valuation and subsequent returns, where we recalibrate our short-term models to emphasize signals over the next nine-to-twelve months. We will henceforth call these models STTM: Short Term Timing Models.
Overnight, the RBA cut the cash target rate for the first time since 2022, marking the beginning of the policy easing cycle in Australia. However, the RBA will proceed cautiously with further rate cuts, given a tight labor market and still elevated services inflation. This will keep Australian government bond yields elevated versus global yields, benefitting the Australian dollar.