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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.
FOREX
- As momentum on the US Dollar has turned bearish again since the start of the second quarter, 'undervalued' currencies continue to converge towards their 'fair' value.
- The chart below ranks the major G9 and CEE currencies based on their percentage difference between the current spot rate and their 'fair' value, which we define using a Behavioral Equilibrium Exchange Rate (BEER) model (using terms of trade, inflation and 10y interest rate differentials as explanatory variables).
- Despite the strong momentum on Cable, GBP is still the most undervalued currency vs. USD (-10.2%), followed by AUD (-9.5%) and JPY (-8.1%).
- On the other hand, CHF remains the most expensive currency relative to the USD (+10.8%), implying that GBPCHF is the value trade according to our BEER model.
- Following the strong momentum in CEE currencies in Q2 2021, PLN is now 5.9% overvalued against the USD, and CZK is now trading at fair value (-0.5% 'undervalued). The HUF is still 7.2% undervalued against the greenback.
Source: Bloomberg/MNI
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.
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