USD-ZAR likely to see further upside in Q2; we raise our 2015 FX forecasts, still anticipating a Q2 peak
• In line with our new FX forecasts, we downgrade our short-term FX weighting on the ZAR to Neutral
• We upgrade our medium-term ZAR FX weigh...
Latam currencies remain vulnerable to lower commodity prices and a renewed UST sell-off
• Faced with high inflation, Latam central banks have generally not participated in this year’s easing round
• We raise our USD-Latam FX forecasts and reduce o...
Asian currency performance has varied significantly this year, in line with our ‘cross-currents’ call
• USD-AXJ is likely to see further upside in Q2 on valuation, policy divergence and flow volatility
• We raise higher our USD-CNY, USD-IDR, USD-M...
We believe the SNB has succeeded in making the CHF unattractive after the scrapping of EUR-CHF floor
• Despite recent CHF losses, the FX market in our view has yet to price in the likely Swiss recession in H1
• We revise our Swiss economic and FX ...
China’s FX market has re-opened amid sustained onshore corporate demand for FX
• The financial account has deteriorated abruptly, due mainly to trimming or hedging of FX liabilities
• We examine onshore corporate flows and identify a powerful shif...
The stabilisation in WTI oil prices represents a potential risk to our long USD-CAD trade
• Stabilisation is not the same as an oil-price recovery; Canada is still affected by a terms-of-trade shock
• We reaffirm our long USD-CAD trade, but raise ...
RBI Governor Rajan has downplayed arguments that high REERs leave INR ‘grossly uncompetitive’
• RBI REERs remain on an upward trajectory, but historic averages offer little insight into INR fair value
• Policy focus on REERs is a big improvement o...
We recommend taking profit on the long USD-SGD trade
• We remain fundamentally bearish on the SGD and will look to re-enter the trade at better levels
• We maintain a short- and medium-term Underweight FX weighting on the SGD...
Lower oil prices will drive Canada into recession in Q2; we expect rates to fall to 0.25% this year
• On both a historical and comparative basis, CAD is underpricing lower oil, suggesting a catch-up period
• Valuation suggests CAD is on the othe...
The JPY has strengthened against the G10 at the start of the year
Fundamentals and rate differentials should ultimately support JPY weakness
JPY correlation to equities suggests its gains are temporary
We reiterate our positive view on USD-JPY an...
EM-21 reserves declined by USD 28bn in December, led by declines in Russia, Turkey and Malaysia
• Asian central bank reserves increased by USD 10.3bn in December, the 10th consecutive monthly increase
• In Asia, while reserves continued to climb...
SNB’s suspension of the EUR-CHF floor can be seen as pre-emptive ahead of ECB QE
• SNB’s continued FX intervention at the margins should rule out levels below 0.95
• Ironically, the SNB’s withdrawal from the currency cap raises the prospect of sus...
• Copper prices have fallen sharply this week, revealing a relative-value opportunity in Latam FX
• Relative fundamentals and positioning are bullish MXN-CLP; we revise USD-CLP forecasts higher
• We recommend buying MXN-CLP via 3M forward/NDF outr...
We use the early-year weakness in EUR-USD and GBP-USD to take profits
• These actions represent tactical risk management decisions, not a change in view
• We retain our medium-term forecasts for lower EUR-USD and GBP-USD...
This supersedes the version dated 9 January 2015. On page 12, amends CNH forecasts.
• AXJ currencies were resilient in 2014 – good for investors but not so favourable for AXJ exporters
• The oil-price slide will help external imbalances, but furth...
• The USD rally, driven by divergence, is looking increasingly like that of the second half of the 1990s
• The Fed’s measures for the USD TWI suggest valuation remains favourable and it may have further to go
• However, there are important differe...
• Gains in the CNY’s trade-weighted value set to stall amid subdued growth and less favourable seasonals
• We revise upward our USD-CNY forecast profile while still projecting a mild CNY rebound in H2
• We lower our short-term FX weighting on the ...
We extend the target levels for long USD-SGD to 1.37 and for short EUR-USD to 1.17
• SGD NEER is now trading 0.6% into the weaker half of the policy band, but has potential to go further
• We expect the ECB to announce QE, and recommend that inves...
We view the SNB imposing negative rates on sight deposits as both a defensive and a pre-emptive move
• The Russian crisis has resulted in safe-haven demand for CHF, while the next ECB meeting looms large
• The CHF will likely remain overvalued un...
CNY may weaken mildly near-term, despite the lack of a depreciating signal from the fix
• Tightness in both onshore and offshore liquidity likely to persist, keeping forward points elevated
• We close our short USD-CNH 6M DF position and look for ...
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