Investment Themes


Investment Theme – Fed rate hike path supports broader trend of dollar strength

Posted on May 25, 2017 at 2:48 pm GMT

The minutes of the Federal Reserve’s May policy meeting that were released on Wednesday indicated that the US central bank remained on track for more rate increases this year. Most FOMC members thought it was appropriate to hike soon. This was interpreted as meaning a move by the Fed could come as early as the June policy meeting. While this should be positive for the dollar, the market reaction was to sell off the greenback and US Treasury yields fell [..]


Investment Theme – Euro rally overdone or start of new uptrend?

Posted on May 24, 2017 at 3:19 pm GMT

The euro’s relief rally following the receding threat of right- and left-wing populism in Europe after Macron’s election win in France has turned the euro to one of this year’s best performing currencies against the US dollar. The presidential election in France was seen as a key test for European political stability, as well as the fate of the European Union (EU). A victory for the far-right candidate, Marine Le Pen, could have boosted far right movements in other European [..]


Investment Theme – End of Trump rally boosts safe havens but is it too early to bring out the bears?

Posted on May 18, 2017 at 3:02 pm GMT

The latest controversy in the White House appears to have been the nail in the coffin for the Trump rally that gripped the markets when Donald Trump unexpectedly won the US presidential election on November 8. The Trump campaign’s promises of big tax cuts, massive infrastructure spending and deregulation boosted equities not just in the US but globally too, and led investors to anticipate a faster pace of rate increases by the Fed due to the potential lift to economic [..]


Investment Theme – Bearish bets against Canadian dollar surge as oil and trade concerns mount

Posted on May 9, 2017 at 3:26 pm GMT

Investor sentiment has been turning increasingly bearish against the Canadian dollar over the past month as sluggish oil prices and growing concerns of a major trade spat between Canada and the United States weigh on the loonie. The bearish outlook drove the Canadian currency to a more than 14-month low against its US counterpart last week, coming close to breaching the C$1.38 level. The loonie was last trading near such levels in February 2016 when crude oil had just started [..]


Investment Theme – Australian dollar dragged down by falling commodity prices; diverging RBA and Fed also a factor

Posted on May 4, 2017 at 2:43 pm GMT

The Australian dollar dropped to a four-month low against its US counterpart on Thursday, driven lower by tumbling prices of base metals, which Australia exports. Adding pressure on the aussie was a broadly stronger greenback following the Federal Reserve policy meeting on Wednesday which ended with a relatively hawkish statement that signaled the US central bank was still on course for further rate hikes this year, and possibly as early as June. Base metal prices fell sharply today, and iron ore [..]


Investment Theme – Relief rally in euro following round one of the French election; further risks lie ahead

Posted on April 25, 2017 at 3:05 pm GMT

The euro was given a boost after the outcome of the first round of French elections last Sunday but the single currency’s outlook does not only depend on the May 7 result. Aside from politics, economic data are also important and so are the European Central Bank’s policies. The risk sentiment outlook improved drastically following the first round of the elections in France last Sunday. There was a relief rally in the euro and in global equity markets and capital [..]


Investment Theme – Geopolitical risks and hawkish Fed lift dollar but outlook determined by US fiscal policy

Posted on April 10, 2017 at 3:24 pm GMT

The US dollar staged a late rebound last week after coming close to breaking below its recent support level of 110 yen. Investor nerves ahead of the summit between the US and Chinese presidents as well, as the risk-off generated by the US airstrikes on Syria, had driven the dollar to a 1½-week low of 110.12 yen on Thursday. Unexpectedly strong signals from the Fed that it will likely start the process of normalizing its balance before the end of [..]


Investment Theme – Weaker yen boosts Japanese business confidence but US policy uncertainty clouds outlook

Posted on April 3, 2017 at 2:36 pm GMT

Business sentiment in Japan rose to a three-year high during the first quarter according to the Bank of Japan’s latest quarterly Tankan survey. A weaker yen, along with strengthening global demand, was a big factor for the optimism as the Tankan all firms index rose from 7 to 10 in the first three months of 2017 – the highest since the corresponding period in 2014. Japanese policymakers have been struggling to boost the country’s flagging growth rate and lift consumer [..]


Investment Theme – Commodity currencies struggle on faltering Trumpflation trade

Posted on March 29, 2017 at 9:59 am GMT

The pullback in the US dollar over the past two weeks has brought little relief to commodity-linked currencies, as their resilience against the resurgent greenback had been underpinned by the Trumpflation trade, which came close to being fully unwound this week. Currencies such as the Australian, New Zealand and Canadian dollars have come under pressure in the past week on fears that the reflation trade inspired by Trump has come to an end. Market expectations that Donald Trump’s presidency would [..]


Investment Theme – Dollar overbought but could rise again

Posted on March 22, 2017 at 4:49 pm GMT

Donald Trump’s election victory last November has had a profound effect on US equity markets, the dollar, US interest rates and inflation expectations. Trump’s presidential win and his pledge on tax cuts, deregulation and infrastructure spending last November spurred bullish bets on the dollar. The dollar index rose 5.6% from the election through to the end of 2016 to reach a 14-year high, while the S&P 500 benchmark equity index rallied to a record high, as fundamentals both in the [..]

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