Error in deserializing body of reply message for operation 'Translate'. The maximum string content length quota (8192) has been exceeded while reading XML data. This quota may be increased by changing the MaxStringContentLength property on the XmlDictionaryReaderQuotas object used when creating the XML reader. Line 1, position 9340.
With another day of dallying and dallying outside, perhaps, of GBP crosses, we have a look at the really big picture for each of the G-10 currencies versus a basket of their peers.
With no further ado, the charts below are of each G-10 currency versus an evenly weighted basket of the nine remaining G-10 peers. Each chart is indexed to 100 at 2500 trading days before the present trading day, which is about nine and half years ago. For more on our latest longer term forecasts, please also have a look at our latest FX Monthly for May. Note that data for all charts has been compiled using a Bloomberg data feed.
USD
While the USD index stopped short of new lows for the cycle, we can see against the rest of the G-10, the USD traded to a new all time low before rebounding sharply on signs of a deceleration in global growth, and possibly also as the market mulls the coming end of the Fed's bond buying program.
What to watch for: the end of QE2 is the dominating factor, as is the status of the USD's tendency to trade simply as the flipside of risk appetite. When will the crazy good news is bad for the US dollar and vice versa trade come to an end? Mostly the USD seems to only be able to thrive on misery elsewhere, rather than due to its own merits, which are hard to find except when risk appetite is on the defensive.
EUR
The Euro fell a very long way from its exaggerated strength in early 2009 and bottomed out at the beginning of this year at a level not seen since early 2002 when the market was very nervous about the currency as it first entered general circulation in the EuroZone.
What to watch for: In the bigger picture, a lot of worry is already priced into the single currency, so the pressure really needs to line up for the Euro for it to continue falling from here against the broader market. Against the rest of the G-10, the currency may be rather rangebound.
JPY
After an enormous back and forth swing in the wake of the earthquake/tsunami, the JPY has largely gone back to following the lead from the bond market of late.
What to watch for: interest rate direction above all. Separately, Japan has been self-funding its public debt for decades, but that can soon no longer be the case as the first baby boomers begin retiring and the top heavy demographics see an exhaustion of further savings potential. Japan could be the canary in the coal mine on the longer term sovereign debt problem that overhangs nearly all of the developed economies.
GBP
Sterling is interesting as it sits near the lows of the last 10 years, neither able to rally or to sell off further. Volatility-wise and barring a sovereign debt panic, the side of least resistance may be to the upside for the embattled pound.
What to watch for: If the BoE's view that inflation may be looked through is vindicated in the months to come and risk appetite generally remains rocky to lower, the pound may find a groove and get repriced higher against the more typically pro-cyclical currencies.
CHF
CHF Has been finding upside as the flipside of Euro woes. Note how each surge like the one we are seeing at present fails to hold in the near term, but always seems to be followed by another surge higher eventually.
What to watch for: if the market ever regains confidence in the Euro and the EU gets ahead of the curve on the sovereign debt situation, look out below for the overvalued CHF! Rising interest rates could also weaken the currency.
AUD
AUD has reached yet another high against the broader market of late on its exposure to the Chinese commodities demand juggernaut and on its relatively gaudy interest rate that encourages carry traders as long as risk appetite is healthy.
What to watch for: A Chinese slowdown would be critical for Australia as the mining industry is the only cylinder firing in the Australian economy. The country risks a banking crisis if the housing bubble correction that may be getting under way now and in the coming months gets disorderly.
CAD
CAD has underperformed its commodity currency peers due to its proximity with the US economy and still rather low interest rate, as the BoC is concerned about the CAD's strength
What to watch for: risk appetite and crude oil prices are critical for the currency, as is the relative strength of the US economy. If rough seas lie ahead for risk, CAD will be a rangebound performer at best in our preferred scenario.
NZD
NZD has been very strong of late, perhaps due to capital flows related to the extensive rebuilding after the February earthquake in Christchurch.
What to watch for: NZD seems to be outperforming its fundamentals, particular If market conditions remain uncertain after the end of QE2. Upside potential may be relatively capped against the rest of the G-10.
SEK
SEK is usually a pro-cyclical currency. As it is a bit of an orbiter of the Euro, it's potential has been somewhat limited by the poorly performing Euro.
What to watch for: SEK has been very tightly correlated with global risk measures for years, like broad equity indices, etc. It's upside may be relatively limited if a rough patch lies ahead for the global economy. It is also vulnerable to excesses in the domestic housing market, though it should avoid the kind of panic it saw back in 2008.
NOK
NOK has come off of late as a passive participant in the proceedings, dragged lower by the huge sell-off in crude oil and perhaps to a degree by the weak Euro.
What to watch for: NOK is generally pro-cyclical, but looks too cheap relative to the broader market if it heads much lower. It will be an interesting currency to watch if we ever get a full blown sovereign debt crisis due to the nearly unmatched public balance sheet.
View the original article here
Nenhum comentário:
Postar um comentário