• 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...
We recommend buying USD-CAD via 3M forward outright on US-Canada economic divergence
• With the housing-market boom stalling, Canada’s safe-haven status is in question
• CAD has room to close the gap with G10 weakness versus the USD...
• USD-CNY demand/supply was heavily in favour of sales in Q1, but should be more balanced in Q2
• More balanced demand/supply and new SAFE rules increase the chance of band widening
• We see a 33% chance of CNY band widening before the July SED, o...
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