MNI BRIEF: China Visitor Mobile Payments Surge in H1

MNI China Daily Summary: Friday, July 26

MNI BRIEF: Foreign Firms Content In China

MNI BRIEF: Turkish Inflation Expectations Steady- TEBA

MNI China Press Digest July 26: Deposit Rates, Fiscal, PBOC

MNI: PBOC Net Injects CNY299.05 Bln via OMO Fri

MNI: BAKER HUGHES US RIG COUNT 589; OIL RIGS 482; GAS RIGS 101

MNI: UNIV OF MICHIGAN CONSUMER SENTIMENT FINAL JUL INDEX 66.4

EZ/UK Bond Supply Calendar: BoE Short APF Operation on Monday

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

Deutsche Bank Maintain Bullish USD Sentiment

USD
EM BulletHomepageBulletMarketsEmerging Market NewsForeign Exchange Bullets
  • Deutsche Bank is not convinced that a peak in US growth optimism and hawkish Fed pricing are sufficient reasons to turn bearish on the USD. DB remain bullish and given their negative bias on EUR, CHF, JPY and SEK, they like buying DXY, which has a combined weight of 80% on these ccys and positive carry of more than 2%, the latter mattering in a low-volatility environment.
  • While the Fed has repriced hawkishly since the start of the year, so have the majority of the world's central banks. With US fiscal policy among the most growth-supportive in G10 and policy pass-through the least, the risks still seem skewed towards pricing more policy divergence between the Fed and the rest of the world. Still, even with the current Fed easing cycle that is priced, the level of US rates remains highly supportive of the greenback. With current market pricing the dollar is set to remain the second-highest-yielding currency in the developed world, a status that has historically been supportive of portfolio inflows and USD outperformance.
  • The US election remains a major constraint to dollar downside. Geopolitical risk premium has been a big source of support of the dollar over the last decade. The universe of perceived safe-haven currencies has shrunk so much that no G10 FX currency is now negatively correlated to equity performance bar the USD. On this front the US election continues to stand out as a historical geopolitical event risk.
  • An unexpected downturn in US data or a pivot to emphasizing a weak-dollar policy from a potential Trump administration would be the biggest risks to their view.
267 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
  • Deutsche Bank is not convinced that a peak in US growth optimism and hawkish Fed pricing are sufficient reasons to turn bearish on the USD. DB remain bullish and given their negative bias on EUR, CHF, JPY and SEK, they like buying DXY, which has a combined weight of 80% on these ccys and positive carry of more than 2%, the latter mattering in a low-volatility environment.
  • While the Fed has repriced hawkishly since the start of the year, so have the majority of the world's central banks. With US fiscal policy among the most growth-supportive in G10 and policy pass-through the least, the risks still seem skewed towards pricing more policy divergence between the Fed and the rest of the world. Still, even with the current Fed easing cycle that is priced, the level of US rates remains highly supportive of the greenback. With current market pricing the dollar is set to remain the second-highest-yielding currency in the developed world, a status that has historically been supportive of portfolio inflows and USD outperformance.
  • The US election remains a major constraint to dollar downside. Geopolitical risk premium has been a big source of support of the dollar over the last decade. The universe of perceived safe-haven currencies has shrunk so much that no G10 FX currency is now negatively correlated to equity performance bar the USD. On this front the US election continues to stand out as a historical geopolitical event risk.
  • An unexpected downturn in US data or a pivot to emphasizing a weak-dollar policy from a potential Trump administration would be the biggest risks to their view.