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30 Mar 2015
USD poised to extend the upside in Q2 – JP Morgan
FXStreet (Edinburgh) - In the view of analysts at JP Morgan, the greenback could resume its ascent during the second quarter.
Key Quotes
“Even after a 3% drop since the March 18th FOMC meeting, the dollar still looks like it will end Q1 up about 4.5% tradeweighted, in turn facilitating some of the highest fund manager returns of the post-Lehman era”.
“But strangely for a trend this broad and this powerful, a single systemic force like Fed policy didn’t drive it”.
“A succession of more idiosyncratic issues – ECB QE, oil oversupply and local politics (Greece, Brazil, Turkey) – did”.
“Q2 should resemble Q1 in that the dollar rises again and volatility only ticks higher, but the index’s gains should be smaller and country-specific drivers slightly different”.
“The most important evolving – so perhaps mispriced – ones include UK elections; Japanese stage-setting for QQE3; Euro area tension between equity inflows and bond outflows; Sweden’s upside inflation surprise; and China’s corporate flow and IMF SDR questions; and Banxico’s attempt to shadow the Fed”.
“The longstanding country specific ones – so maybe less material for price – include rate cut risks in Australia and Canada; Brazil’s imbalances and its recession; and India's tension between reform momentum and forex intervention”.
Key Quotes
“Even after a 3% drop since the March 18th FOMC meeting, the dollar still looks like it will end Q1 up about 4.5% tradeweighted, in turn facilitating some of the highest fund manager returns of the post-Lehman era”.
“But strangely for a trend this broad and this powerful, a single systemic force like Fed policy didn’t drive it”.
“A succession of more idiosyncratic issues – ECB QE, oil oversupply and local politics (Greece, Brazil, Turkey) – did”.
“Q2 should resemble Q1 in that the dollar rises again and volatility only ticks higher, but the index’s gains should be smaller and country-specific drivers slightly different”.
“The most important evolving – so perhaps mispriced – ones include UK elections; Japanese stage-setting for QQE3; Euro area tension between equity inflows and bond outflows; Sweden’s upside inflation surprise; and China’s corporate flow and IMF SDR questions; and Banxico’s attempt to shadow the Fed”.
“The longstanding country specific ones – so maybe less material for price – include rate cut risks in Australia and Canada; Brazil’s imbalances and its recession; and India's tension between reform momentum and forex intervention”.