search.noResults

search.searching

dataCollection.invalidEmail
note.createNoteMessage

search.noResults

search.searching

orderForm.title

orderForm.productCode
orderForm.description
orderForm.quantity
orderForm.itemPrice
orderForm.price
orderForm.totalPrice
orderForm.deliveryDetails.billingAddress
orderForm.deliveryDetails.deliveryAddress
orderForm.noItems
FX FUNDAMENTAL ANALYSIS


While the cash rate remains at 1.75%, we expect the rhetoric to begin leaning to the dovish side. The Reserve Bank of New Zealand did so at the end of Q1. The economy is soft and global headwinds remain. The 10-year benchmark yield fell almost 40 bp last month. It is below the cash rate and bank bill rates. Strengthening of China’s


economy may help,


but part of that entails bringing back on shuttered capacity, such as coal. More than 100 mining operations are seeking to restart activity for example. Policymakers may be particularly sensitive to labor market developments and inf lation expectations, while the widening of Australia’s interest rate discount and curtailed risk appetites leave the Aussie vulnerable.


AUD Spot:


Implied Volatility:


Median Forecast Bloomberg Survey:


$0.7096 7.1%


$0.7131 One-Month Forward Indication: $0.7101 Mexican Peso


AMLO’s agenda is working its way through Congress and that it may take most of the second quarter to complete it. Although price pressures appear to be easing, the central bank is still reluctant to signal it will ease policy, which is how it undergirds its strong market credentials. The high interest rates in the current may


10 FX TRADER MAGAZINE April - June 2019


After rising to its best level since July, the Chinese yuan pulled back and finished the quarter on March’s lows. The dollar spent a little time below CNY6.70, which seems like the lower end of the officially-approved range for the dollar, though some see it extending toward CNY6.60. China’s tax cuts are to be implemented in April, and we expect economic activity to pick-up. There is scope for a reduction in required reserve


draw carry-trade strategy interest. Speculators in the futures markets have a record gross long peso futures position of almost 200k contracts (MXN500k per contract), as of March 26. It grew four-fold over the quarter. Such extreme positioning is often thought of as a contrarian indicator. The dollar rose 1.75% against the peso in the last week of March.


Chinese Yuan


ratios. It may be delivered in April or May. Meanwhile, China is announcing other measures


to


open the domestic economy to foreign companies. Chinese bonds will be included in the Bloomberg- Barclay’s benchmarks, and Chinese shares are getting a heavier weighting in the MSCI indices. The rise of passive investing in the US (as well as Europe and Japan) translates these benchmark changes into demand for securities and currency.


CNY Spot:


Implied Volatility:


Median Forecast Bloomberg Survey:


One-Month Forward Indication:


CNY6.7120 3.94%


CNY6.7164 CNY6.7220


Marc Chandler


Global Head of Currency Strategy


Brown Brothers Harriman


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61