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Still long US dollars and volatility - JPMorgan

FXStreet (Bali) - John Normand, FX Strategist at JP Morgan, notes that the US dollar is on the cusp of rallying versus every currency this year.

Key Quotes

"The dollar is on the cusp of rallying versus every currency this year, a clean sweep rarely witnessed outside of US/global recessions and financial crises."

"The causes are well known: only once has Fed policy diverged so much from the BoJ/ECB, and seldom has emerging markets growth been this weak relative to the developed economies."

"But the dollar’s level discomfits investors more than these explanations do. The currency is overshooting on some standard models but it isn’t on others that acknowledge a hybrid environment of conventional Fed policy and unconventional BoJ/ECB policy."

"Trades: still long dollars and volatility, but adding cross-rate exposure. In the Macro portfolio, add short EUR/MXN to long USD basket vs AUD (new), EUR, GBP, JPY and NZD. Stay short EUR/CHF."

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