25 Feb 2015
Investors to drop the dollar in the short-term on improving risk appetite – OCBC
FXStreet (Barcelona) - Emmanuel Ng of OCBC Bank, explains that with the recent improvement in risk appetite levels, investors might favour risk-related currencies and dump the dollar in the short-term, GBP and CAD favoured.
Key Quotes
“Positive global equities, generally compressing sovereign risk premiums, as well as a continued softening in short-end FX vols, pulled the FXSI (FX Sentiment Index) yet lower within Risk-Off territory on Tuesday.”
“With Yellen delivering an open-ended message and doing little to encourage expectations of a mid-year liftoff, expect the broad dollar to remain adrift with further potential capitulation likely in store with yield differentials deteriorating to the detriment of the greenback on Tuesday.”
“In a nutshell, investors may in the short term drop the dollar for now and move gingerly in favor of risk-related currencies given the recent concomitant improvement in risk appetite levels (note that the FXSI has eased for the past 3 consecutive sessions).”
“In addition, with investors re-assessing the balance of central bank dichotomies, the GBP (BOE) and the CAD (BOC) may garner near term traction against the wobbly greenback in the near term.”
Key Quotes
“Positive global equities, generally compressing sovereign risk premiums, as well as a continued softening in short-end FX vols, pulled the FXSI (FX Sentiment Index) yet lower within Risk-Off territory on Tuesday.”
“With Yellen delivering an open-ended message and doing little to encourage expectations of a mid-year liftoff, expect the broad dollar to remain adrift with further potential capitulation likely in store with yield differentials deteriorating to the detriment of the greenback on Tuesday.”
“In a nutshell, investors may in the short term drop the dollar for now and move gingerly in favor of risk-related currencies given the recent concomitant improvement in risk appetite levels (note that the FXSI has eased for the past 3 consecutive sessions).”
“In addition, with investors re-assessing the balance of central bank dichotomies, the GBP (BOE) and the CAD (BOC) may garner near term traction against the wobbly greenback in the near term.”