• Saudi Arabia’s FX reserves dropped by USD 20bn in February 2015
• Although some attribute the drop to budget financing, we disagree
• We think the government has better options to finance its budget than by liquidating FX reserves
• The drop in...
• G10: Custodian clients turned net USD-JPY buyers in April
• Asia: SCTF Aggregate Flow Index shows that our clients turned net USD-KRW sellers
• Africa: SCTF Aggregate Position Index shows that our clients are short USD-ZMW, long USD-ZAR
• Closing the tax loophole on foreign earnings is at the centre of the current US tax-reform debate
• Obama’s tax proposal would result in limited tax revenue, but significant corporate repatriation to the US
• In FX markets, the USD would be supp...
• Benefits of previous rate cuts are emerging – housing market is picking up, KOSPI is rallying, credit is increasing and policy makers are becoming less dovish
• We maintain our view of no rate change this year
• We maintain our Neutral outlook o...
• Data indicates continued economic recovery; strong industrial data offset weak export growth in Feb-Mar
• We lower our 2015 inflation forecast to 0.4% y/y (from 0.8%) and raise our 2016 forecast to 1.8% (1.4%)
• We think the CBC will keep the po...
Hedge funds in the UK and US have significantly reduced long USD positions, awaiting clear trends
• Real-money funds are focused on relative value, favouring O/W AXJ vs. Latam currencies and O/W INR
• European corporates perceive long-term value i...
We see upside risks to USD-INR in the short term ahead of a likely first Fed rate hike in Q3
• Strong inflows in Q1 have resulted in major positioning risk, while Q2 seasonals are less favourable
• RBI is likely to continue intervening to limit ex...
This supersedes the version dated 1 April 2015. Changes China’s FX reserves valuation adjustment.
Our EM-21 Reserve Monitor shows that central bank reserves actually increased again in February
Asia continues to accumulate reserves at a quickening...
We recommend selling USD-CNH 3Mx12M outright in the FX Trading Portfolio
We expect stability in USD-CNY near-term as authorities calm depreciation worries ahead of IMF meeting
We recommend being Neutral on the CNY against the USD in AXJ regional F...
The USD has experienced a healthy correction on positioning and over-reaction to the FOMC
• A careful assessment of Fed comments on the USD shows they are relatively balanced
• The fundamental drivers of USD strength remain in place, while valuati...
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