In our recent reports we have expressed a positive view for EM and commodity currencies (See AmpGFX Reports on 12 and 14 April). One of the currencies we have been watching in this regard is the New Zealand dollar. The NZD has some favorable attributes in contrast to a number of other commodity currencies; including […]
The recent rising trend in the JPY and falling trend in the USD have had a life of their own this year, unwinding excessive positioning built up from end 2012 to mid-2015 for the JPY and from mid-2014 until January this year for the USD. These trend reversals have contributed to the volatility in global […]
Risk aversion remains elevated. Brexit fears may continue to paralyze the GBP and hold back European assets. However, record low aggregate bond yield indices, held down by QE and negative rates, and the prospect of more in Japan, is forcing investors to move out the risk curve in many asset classes. Emerging markets appear relatively […]
The rise in JPY is highlighting global risk aversion that may persist for several months. A key contributing factor may be increasing fear leading up to the Brexit vote, removing EUR as a potential save haven. While Japan may threaten intervention to prevent excessive and rapid moves in the JPY, few see this policy being […]
Domestic Australian factors are being overshadowed by global developments. These global drivers account for both its rapid rebound over the last month and its significant correction in recent days. Throughout this move we have been skeptical that the AUD can sustain its rally with significant local political and economic uncertainty. These risks remain and continue […]
The recent rebound in global assets has been driven by emerging market and USA assets, while other developed markets, particularly Japanese and Eurozone assets have lagged behind and indeed their bank stocks have sagged. The rise in US assets is supported by resilience in US economic data, a dovish turn by the Fed and a […]
Surprising strength in NZD and AUD today, before the dovish Yellen speech, despite weaker oil prices, weak Australian bank share prices, and negative news related to China in recent days, may reflect renewed interest in carry trades, particularly funded out of the JPY. The JPY has been relatively weak in the last two weeks and […]
Global markets and investor confidence have reached an inflection point. They have recovered from the extreme bearishness in the early months of the year supported by significant further monetary policy easing, cooperation among oil-producing nations, a sense that Chinese policymakers are working harder to underpin growth and stabilize its capital markets, and ECB efforts to […]
We wrote on Monday that currencies might start to range trade and global markets may start to calm-down, encouraging more carry trades, potentially supporting higher yielding commodity and EM currencies against the lowest yielding EUR and JPY. However, markets have failed to calm so far this week. We need to recognize firstly that there has […]
The USD has been broadly weaker over the last month or so, but it peaked more than nine months earlier against EUR and JPY. The long base and recent strong performance in EUR and JPY despite further policy divergence suggests that the USD had been stretched and may be regarded as expensive. The mood in […]