23 Jun 2014
How H2 could differ from H1 - J.P. Morgan
FXStreet (Łódź) - In the opinion of the J.P. Morgan Global FX Strategy team, for currencies, the first half of 2014 will beremembered for at least three lows: in volatility, in trading volumes and in returns.
Key quotes
"There are some scraps of silver lining, however. More consensus trades worked than is commonly acknowledged, and FX model-driven strategies began delivering alpha again after a two-year slump."
"The second half of 2014 will probably be similar for its illiquidity but different for the rank order of currency performance and year-end level of volatility."
"In terms of trend reversals, H1 winners like JPY,NOK, NZD, TRY and BRL will probably weaken in H2, while H1 losers like CNY should appreciate. In terms of trend extensions, expect further losses for EUR and ZAR, and gains for GBP and KRW."
"Vol should reverse higher to about 7% on VXY by December, with the Fed a more likely driver than geopolitics. National politics, however, become focal for the UK in September, Brazil in October and US in November, but only the first two should be FX events."
"Next week: flash PMIs globally, Fed speak, UK Financial Stability Report, Euro area inflation, CEEMEA central banks."
Key quotes
"There are some scraps of silver lining, however. More consensus trades worked than is commonly acknowledged, and FX model-driven strategies began delivering alpha again after a two-year slump."
"The second half of 2014 will probably be similar for its illiquidity but different for the rank order of currency performance and year-end level of volatility."
"In terms of trend reversals, H1 winners like JPY,NOK, NZD, TRY and BRL will probably weaken in H2, while H1 losers like CNY should appreciate. In terms of trend extensions, expect further losses for EUR and ZAR, and gains for GBP and KRW."
"Vol should reverse higher to about 7% on VXY by December, with the Fed a more likely driver than geopolitics. National politics, however, become focal for the UK in September, Brazil in October and US in November, but only the first two should be FX events."
"Next week: flash PMIs globally, Fed speak, UK Financial Stability Report, Euro area inflation, CEEMEA central banks."