The breadth of the USD rally could have further to run; we close our short USD-BRL position
• Expectations for a hawkish BCB have diminished in recent weeks, despite still-high inflation
• The BRL’s carry remains attractive; we await better level...
In a carry-driven environment, the BRL should outperform in coming quarters
• The start of a central-banking tightening cycle further strengthens the BRL outlook
• Current BRL levels compare favourably to historical valuations and positioning is c...
We recently revised our Latam FX forecasts in the wake of the Fed’s QE3 policy announcement
• While QE has historically been positive for Latam currencies, we observe clear diminishing returns
• Regional central banks will fight USD weakness, exc...
Top 3 data/events
• Singapore – NODX growth expected to be moderate
• Germany – ZEW survey to point to weaker sentiment
• United States – Maintain pay 5Y swap spread position
• Market focus
• We believe that hopes of further QE are optimistic ...
Top 3 data/events
• Philippines – BSP is likely to keep rates on hold for the remainder of 2012
• Euro area – Chancellor Merkel to outline her stance ahead of the G20 meeting
• US – We forecast weaker-than-consensus May retail sales
• Market foc...
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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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