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May 30, 2013
Flash: Dollar strength paused yesterday with CHF and JPY capitalising - OCBC Bank
FXstreet.com (Barcelona) - Emmanuel Ng of OCBC Bank notes that with easing UST yields, dollar strength paused on Wednesday with the CHF and the JPY making the most of the greenback’s hesitation.
Meanwhile, he sees that the JPY also managed to retrace higher against its G10 counterparts as USD/JPY fell through 101.00. Meanwhile, the antipodeans also underperformed (the OECD cut its global growth forecasts) across the board outside the dollar space.
Ng adds that on late Wednesday, the NZD came under renewed pressure after the RBNZ governor stated that the central bank was prepared to up size (foreign exchange intervention activity) if the opportunities arise. He also added that a combination of easing house prices, lower inflation and higher exchange rates could increase the possibility of rate cuts. On other fronts, he notes that the BOC kept rates unchanged at 1.00% as widely expected and retained its lightly hawkish bias, affording the CAD some trace support.
Further, he sees that the OECD yesterday also warned about the delicacy of a Fed tapering given the implicit impact on long term yields. He writes, “As we had hazarded previously, the issue of an eventual withdrawal of excess global liquidity over the medium term may complicate the dollar story, especially if global growth remains tepid. TO this end, the IMF on Wednesday also cut its growth forecasts for China. In the interim, expect markets to continue to look towards US data releases for further cues.”
Meanwhile, he sees that the JPY also managed to retrace higher against its G10 counterparts as USD/JPY fell through 101.00. Meanwhile, the antipodeans also underperformed (the OECD cut its global growth forecasts) across the board outside the dollar space.
Ng adds that on late Wednesday, the NZD came under renewed pressure after the RBNZ governor stated that the central bank was prepared to up size (foreign exchange intervention activity) if the opportunities arise. He also added that a combination of easing house prices, lower inflation and higher exchange rates could increase the possibility of rate cuts. On other fronts, he notes that the BOC kept rates unchanged at 1.00% as widely expected and retained its lightly hawkish bias, affording the CAD some trace support.
Further, he sees that the OECD yesterday also warned about the delicacy of a Fed tapering given the implicit impact on long term yields. He writes, “As we had hazarded previously, the issue of an eventual withdrawal of excess global liquidity over the medium term may complicate the dollar story, especially if global growth remains tepid. TO this end, the IMF on Wednesday also cut its growth forecasts for China. In the interim, expect markets to continue to look towards US data releases for further cues.”