• 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...
• 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...
Our SC IMM positioning heatmap suggests AUD may see a major short-term rally
• Leveraged net shorts in the AUD vs. the USD, EUR, GBP and NZD reach sample extremes
• Leveraged funds should buy 1M EUR-AUD, GBP-AUD put spreads...
USD-JPY fundamental risks appear to be two-way, while technicals are turning higher
• We expect USD-JPY to remain volatile and range-bound near-term, but turn higher into 2014
• Real money should stay Neutral on the JPY; leveraged funds should put...
Top 3 data/events
• South Africa – We close our receiver on the 2Y swap
• India – Apr-Jun 2013 GDP growth likely slipped further
• US – Q2 GDP growth expected to be revised slightly up
• Japan’s July data is likely to show a mode...
The surging JPY triggers the stop in our long BRL-JPY position
• While carry offers some cushion, failing to sustain the break above 45.00 points to more downside risks
• We still believe the BRL will perform better in H2 on improving data, portfo...
The ruling LDP coalition wins a majority at the election and gains control of both houses of the Diet
• The government’s top priority of boosting growth now heads the reform agenda
• FX: We expect the USD-JPY and JPY crosses to remain in a range n...
With EM volatility stabilising, we see this as an opportunity to initiate long carry positions
• We see the BRL as oversold, while the JPY could weaken again after Upper House elections
• We recommend buying 3M BRL-JPY ...
Abe’s ‘third arrow’ was a major disappointment, exacerbating significant position liquidation
• We have revised our USD-JPY forecasts lower, still anticipating more JPY weakness into 2014
• Leveraged funds: Sell 1M ATMF USD-JPY straddles or buy 2M...
• Near-term, the market will focus on the sharp rise in UST yields and the risk of the Fed tapering QE3
• The SGD NEER may trade into the weak half of policy band; SGD to underperform G3
• We stand aside for now on the SGD given market volatility...
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This report provides an economic outlook for more than 60 economies worldwide and investment implications for commodities, credit, equities, FX and interest rates markets in 2014. We expect a better 2014, with world economic growth picking up and inflation staying benign. Global growth should increase to 3.5% in 2014 from 2.7% in 2013, helped by improvements in economic activity in the US and Europe. A pick-up in growth in the West is good news for the rest of the world, and we expect emerging economies’ growth to outpace G7 growth by almost 4 percentage points.
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