• 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...
Broad USD weakness, technicals and positioning could support the THB further near-term
• Real-money funds are underweight Thai local markets; as they cover their shorts, THB could rally further
• Fundamentally, we like this trade and will look to...
• This supersedes the version dated 21 March 2014. Page 1, third paragraph, corrects the policy rate.
• Bank of Zambia tightens policy further, raising rate on overnight lending facility with immediate effect
• Earlier regulation suspending FX b...
• USD-PKR has rallied 10% to 99 since end-2013 on FX aid flows, improving sentiment
• However, fundamentals are weak - the trade deficit is widening, FX reserves are below comfort levels
• Short-term gains to persist; we forecast PKR at 98 by Ju...
• We add New York to our RGI, reflecting rising Renminbi payment flows and CNH FX turnover
• New York enjoys time-zone advantage, massive trade with China, and rising investor interest in the RMB
• We summarise the latest Renminbi developments in...
• 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 BoJ surprised the market by expanding its current loan-support programme
• We do not think the BoJ is likely to roll out any fresh easing in the near term
• Reform implementation remains critical for Japan’s revival...
• Top 3 data/events
• Malaysia – CPI inflation likely edged up further in January
• UK – BoE minutes to echo Inflation Report as unemployment falls to 7%
• South Africa – January CPI inflation a key focus
• Market focus
• Credit growth was...
• We investigate volatility slopes for EUR-USD, GBP-USD, EUR-JPY and USD-JPY
• We find similar statistical profiles and mean-reverting properties across currency pairs
• We find that on average the volatility slopes considered for these pairs mean...
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...
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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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