• We highlight increasing downside risks to USD-JPY in the near term; expect a pick-up in JPY volatility
• The Bank of Japan appears comfortably sidelined for now even as domestic data hits a soft patch
• We revise our short-term USD-JPY forecas...
• Spare capacity is key for BoE policy makers: by Q4-2014, less slack in the labour market should trigger concerns over the medium-term inflation outlook
• We expect a measured hiking path equivalent to 25bps each quarter from Q1-2015 through 2016
The BoE drops its unemployment threshold and is now focusing on spare capacity and productivity
• Economic slack could be eliminated by early 2015, with unemployment reaching equilibrium by late 2014
• We revise up our 2014-15 GDP forecast, cut 20...
Time may be running short for EUR-USD to fall as underlying fundamentals grow increasingly balanced
• We remain committed USD bulls, however, so we still expect a EUR-USD move lower in H1
• Leveraged funds: We recommend buying 3M 25/10-delta EUR-U...
Top 3 data/events
• South Korea – Imports continue to grow as the economy recovers
• Thailand – Take profit on receive THB 3Y IRS
• USD-CAD – We are raising the stop-loss on our long position
• China’s official manufacturing PMI ...
We think EUR-USD spot is likely to remain confined to familiar ranges into early next year
• The macro drivers behind EUR-USD have attained a near-term equilibrium; major risks are now priced in
• Even with implied vols at their current subdued le...
• The Bank of Canada has formally dropped its tightening bias and turned more dovish
• This should put the CAD under renewed depreciation pressure as the local economy remains sluggish
• We are adding USD-CAD longs to the Standard Chartered Tradin...
Fed backtracks at September’s meeting: we change our QE tapering call to March 2014
• Low inflation and fiscal risks at the forefront; Bernanke’s views unlikely to change before he steps down
• The Fed may reduce QE by USD 20bn by March, in our vi...
We are closing our long USD-CAD position to protect profit as spot has lost upward momentum
• Broad-based USD longs appear vulnerable to a position squeeze, USD-CAD is unlikely to remain immune
• CAD’s fundamentals remain weak, however, and we w...
• We revise our AUD-USD forecasts lower on the Fed’s QE ‘tapering’ plans, China’s large mining capacity
• Leveraged funds: Position for further declines in AUD-USD, with strategies based on risk reversals
• Real-money funds: Cut medium-term FX all...
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The world economy is in transition. Global growth rates are picking up, but transition means elevated risks and volatility.
In terms of global implications, all eyes will be on the US and China, with the US normalising monetary policy and China rebalancing its economy.
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