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...
• Overview – In a challenging market environment, macroeconomic and policy divergence – the ‘new normal’ – remains the critical foundation of our updated views and forecasts, with the US economy, USD and US rates leading the way higher. This will ev...
The BoC surprised with a 25bps rate cut; an earlier move than we predicted
• We think Canada’s GDP growth and inflation could come under more pressure than the BoC expects
• More cuts will be needed, in our view; we expect another 25bps cut in Mar...
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...
This supersedes the version dated 18 August 2014. Amends title of China item.
• Top 3 data/events
• China – Balanced supply and demand of FX onshore in July
• UK – CPI inflation likely remained at 1.9% in July
• US – We expect a moderate reco...
Top 3 data/events
• G10 FX – Forecast changes to USD-CAD and USD-CHF
• Australia – RBA will likely reiterate the need for a ‘period of stable rates’
• India – RBI likely to maintain its vigil on inflation
• Market focus
• We estimate capital i...
We revise up our forecast for Canada’s GDP growth to 2.2% y/y for 2014
• We now see inflation rising to 1.4% for 2014, 0.2ppt down from our prior estimate
• We expect the BoC to hike its policy rate in Q4-2015, one quarter earlier than previously ...
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