9 Apr 2014
USD winning race to the bottom vs G10 currencies - RBS
FXStreet (Bali) - Greg Gibbs, FX Trading Strategist at RBS, offers his view on the current state of affairs in the FX market.
Key Quotes
"We are in the midst of a powerful re-engagement with emerging markets after a year of under-performance. The USD is broadly under pressure."
"While the US rates outlook has not changed much recently, the USD is still largely winning the race to the bottom among major currencies. EUR continues to benefit from narrowing periphery spreads, the GBP is benefiting from its higher yields and lacking the dovish punch of the Fed's Yellen. The JPY is being dragged up by a weaker USD, but now back towards the low end of the range in USD/JPY, its funding currency attributes should prevent much further JPY strength."
"While China slowdown fears have abated, they have not gone away, this should eventually prove a stopping point for the recovery in commodity currencies. But the pressure has eased off enough to see AUD benefit from its strong housing market keeping rates up even as the AUD rises to uncomfortable levels for the RBA."
Key Quotes
"We are in the midst of a powerful re-engagement with emerging markets after a year of under-performance. The USD is broadly under pressure."
"While the US rates outlook has not changed much recently, the USD is still largely winning the race to the bottom among major currencies. EUR continues to benefit from narrowing periphery spreads, the GBP is benefiting from its higher yields and lacking the dovish punch of the Fed's Yellen. The JPY is being dragged up by a weaker USD, but now back towards the low end of the range in USD/JPY, its funding currency attributes should prevent much further JPY strength."
"While China slowdown fears have abated, they have not gone away, this should eventually prove a stopping point for the recovery in commodity currencies. But the pressure has eased off enough to see AUD benefit from its strong housing market keeping rates up even as the AUD rises to uncomfortable levels for the RBA."