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Flash: US QE exit and China slowdown concern have increased recently - DBS Group

FXstreet.com (Barcelona) - DBS Group analysts note that market concerns about US QE exit and China slowdown have increased recently.

In Korea, they think the latter could be a bigger challenge than the former and the country’s capabilities to withstand the risks of capital outflows and dollar liquidity tightening have improved in recent years. They add that the exposure to foreign debt has decreased thanks to stricter regulations adopted by the government. Further, the external debt coverage ratio has risen to 1.33X in 1Q13 from the 2008 low of 1.08X, and the ratio between foreign reserves and short-term external debt rose to 2.68X from 1.26X. Meanwhile, they see that Korea didn’t experience excessive credit growth or asset price inflation during the post-2008 episode, because of the deleveraging in SME sector and the authorities’ prudent controls on household credit. They write, “Moreover, a withdrawal of QE stimulus by the US Fed should be based on the conditions that US growth is picking up and the recovery is sustainable. This implies an improvement in global demand, which should ultimately benefit Korea through the international trade channel.”

GBP/USD much lower to find support 1.5150/60

The Chicago Purchasing Managers Index released printed 58.7% against consensus 50.0% and 49.0%. The more important number, the Reuters/Michigan Consumer Sentiment Index, that was released afterwards came in better as well, 84.5% against consensus 83.7% and previous 76.4%
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Flash: The dollar will get much stronger, but may be due for a pause - Societe Generale

Societe Generale strategist Vincent Chaigneau believes that the king dollar has a long way to go.
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