Dollar – Diversification, rotation and valuations

Media and analyst reports focussing on the scope for further US Dollar weakness and Emerging Market currency outperformance have continued to proliferate in the past month. The consensus view is still seemingly that a Democratic administration will fuel large US twin deficits and expectations of higher domestics inflation while Fed will keep rates on hold, eroding the value of Dollar

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Sunday bloody Sunday

Sterling underperformed in September, in line with our bearish forecast (UK & Sterling facing potential quadruple whammy, 4th September 2020). It gradually recovered from 22nd September, appreciated throughout October and peaked on 27th November. Sterling NEER has since weakened about 2.4% to an 11-week low. The sell-off at the turn of December was exacerbated by all four of the United

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Time is priceless but has a steep cost

While some countries, including Sweden and United states, have eschewed national lockdowns over the past nine months or so the vast majority have adopted unprecedented measures to deal with a once in a century pandemic which has so far cost almost 1.4 million lives. The strategy has invariably been a simple yet complex one – to save lives – but

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Event risk and market volatility: Partners in crime

Market volatility has been reasonably subdued in recent weeks, despite acute event (and macro data) risk in the next four weeks, including of course US presidential elections on 3rd November, and a number of significant macro, policy and geopolitical developments. In the past month volatility in major developed and emerging market currencies versus the US Dollar has only risen materially

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Dollar, Euro & Sterling in focus, Asian currencies under the radar screen

Much of the market focus in recent months has been on major reserve currencies, namely: The US Dollar which, contrary to bearish expectations and in line with our benign Dollar view, has treaded water in the past six weeks and since the Fed’s tweak on 27th August to its dual inflation and employment mandate; The Euro’s rapid appreciation in July,

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UK & Sterling facing potential quadruple whammy

Sterling has enjoyed a strong, if bumpy ride, since late-June. It has been the second strongest major currency against the US Dollar and appreciated 3.7% in NEER term, thanks in part to a build-up of speculative long-Sterling positions. Markets have seemingly taken heart from government measures to support the economy, including the labour and housing markets and service sector, the

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United Kingdom: Back to 1999… and to the future

Part Two of this Five-part series of Insights into the UK economy and financial markets examines the critical role played by the British government, which continues to pump tens of billions into the economy via a vast array of measures, including a furlough scheme, to support household disposable incomes and ultimately consumption and GDP growth. Households’ limited opportunities to spend,

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