Event – The Bank of Japan (BoJ) board kept its ‘quantitative and qualitative monetary easing’ (QQE) programme unchanged at JPY 80tn of annual asset purchases at its 30 April monetary policy meeting. We had expected an expansion of QQE at the meeting...
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...
• G10: Custodian clients turned net USD-CAD sellers in March
• Asia: SCTF Aggregate Flow Index shows that our clients turned net USD-IDR buyers
• Africa: SCTF Aggregate Position Index shows that our clients are short USD-ZMW, long USD-ZAR
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...
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...
Japanese investors are bullish on Japan
• Local optimism is being expressed through equities, not FX
• Institutional and retail positions in USD-JPY have been significantly reduced
• Japanese investors and corporates continue to move capital ove...
• 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...
G10: Custodian clients turned net buyers of USD-CAD in February
Asia: SCTF Aggregate Flow Index shows that our clients turned net buyers of USD-THB
Africa: SCTF Aggregate Position Index shows that our clients are short USD-ZMW, long USD-ZAR
The JPY has strengthened against the G10 at the start of the year
Fundamentals and rate differentials should ultimately support JPY weakness
JPY correlation to equities suggests its gains are temporary
We reiterate our positive view on USD-JPY an...
• The USD rally, driven by divergence, is looking increasingly like that of the second half of the 1990s
• The Fed’s measures for the USD TWI suggest valuation remains favourable and it may have further to go
• However, there are important differe...
Korean clients were more concerned about Korea’s long-term growth prospects and competitiveness
• Japanese clients were more pessimistic about ‘Abenomics’, notably with consumption tax hike looming
• Both sets of clients had a benign view of the U...
This supersedes the version dated 14 November 2014. Page 1, corrects ‘Key data/events’ table.
• Top 3 data/events
• Japan – Q3 GDP likely reflects weak recovery momentum
• Singapore – NODX likely grew for a third straight month
• United States ...
• G10: Corporates turned large buyers of USD vs. AUD in October; custodians increased USD-CHF shorts
• Asia: SCTF Aggregate Position Index shows that our clients reduced longs in USD-IDR
• Africa: SCTF Corporate Position Index shows that our clien...
• The policy response by the Korean authorities to KRW weakness should keep USD-KRW supported
• Limited short-term macro impact of JPY weakness on Korea, but prolonged impact is more significant
• We revise USD-KRW forecasts higher and forecast ...
Top 3 data/events
China – Inflationary pressure likely remained subdued
Philippines – Global influences weigh on remittance growth
UK – Unemployment likely continued trending lower in August
We expect the BoK to keep the base rat...
The ‘currency wars’ began in the US, and have since moved across the G10
• With the ECB weakening the EUR, the euro area and Japan are now exporting deflation to EM
• We appear to be seeing the start of an official AXJ response, suggesting AXJ FX ...
Post-FOMC, US yields will likely rise into year-end, supporting USD-JPY
While JPY weakness in 2012-13 was Japan-led, this leg is US-driven
We recommend buying USD-JPY via 3M forward outright, targeting 113...
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...
USD-JPY spot and front-end vol have moved higher, but we expect range-trading to persist near-term
• Fundamentals, technicals and flows point to an upside breakout in USD-JPY later rather than sooner
• We recommend selling 2M 105 USD calls/JPY put...
We add G10 FX flows and positioning to our proprietary flow analysis of Asian and African currencies
• G10: Short USD positioning is reduced in JPY; long USD positioning remains heavy in NZD
• Asia: Short USD positioning is large vs. INR, KRW, CN...
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