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Currencies

What Are Balance Of Payments Telling Us?
Most developed market central banks have paused hiking interest rates. With interest-rate differentials having been the most important driver of currencies over the last two years or so, the focus might now shift to other factors. One such factor could be…
Daily Insights
The Riksbank Stands Pat
The Swedish krona was among the worst performing G10 currencies on Thursday after the Riksbank kept the policy rate unchanged at 4%, surprising consensus expectations of a 25bps hike. The post-meeting press release underscored that although inflation is…
Daily Insights
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The Interplay Between Inventory Cycles And Markets

Contrary to the prevalent belief in the global investment community, goods/merchandise inventories in the US and East Asia are rather elevated. Financial markets respond to final demand fluctuations, not inventory restocking. Global manufacturing/trade will continue contracting, even though the pace of contraction might moderate in the near run. We recommend that investors fade the current rally.

Emerging Markets Strategy by Ziyuan Huang, Arthur Budaghyan
Repairing Eurozone Confidence
Confidence is on the mend in the Euro Area. The rebounding ZEW growth expectations index reveals that investors are becoming more optimistic. The German IFO's business climate index inched higher in October for the first time since April, suggesting that…
Daily Insights
CLP Depreciation Is In Its Last Innings
According to BCA Research's Emerging Markets Strategy service, the Chilean peso’s depreciation is already quite advanced. Over the next few months, the CLP will remain under downward pressure due to a likely global risk-off move. EM currencies will…
Daily Insights
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Carry Trades And The Coming Curse From Volatility

In this report, we evaluate the risk to carry trades in the coming months.

Foreign Exchange Strategy by Chester Ntonifor
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Watch Taiwan, Not US-China, For Détente

Investors should not get their hopes up about the Biden-Xi summit. Wait to see if a new ruling party is elected in Taiwan before downgrading geopolitical risk in the Taiwan Strait. US-China strategic détente is possible but neither the geopolitics nor the macro backdrop warrant a risk-on position next year.

Geopolitical Strategy, Global Investment Strategy by Matt Gertken
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Taking The Pulse Of China’s Capital Flows

China’s capital outflows will likely remain substantial at least through the next few quarters. This wave of capital outflows will likely be more chronic, albeit less acute than the 2015-16 episode. Persistent capital outflows will exert downward pressure on the RMB.

China Investment Strategy by Qingyun Xu
Copper-To-Gold Ratio: Emerging Green Shoots?
Throughout most of the second half of this year, the copper-to-gold ratio has been relatively stable, gyrating within a tight range. However, it is starting to show some tentative signs of bottoming. After the copper-to-gold ratio initially fell in the first…
Daily Insights
China's Impossible Trinity
According to BCA Research’s China Investment Strategy service, Chinese policymakers are facing the Impossible Trinity. When faced with rapid currency depreciation in August-September, the PBoC deliberately tightened liquidity and steered interest rates…
Daily Insights

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