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Currencies

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Implications Of Shrinking Dollar Liquidity

US dollar liquidity has been shrinking, which has important ramifications for global asset prices, including currencies. In this report, we delve into the process of dollar liquidity creation and the outlook for currencies over the next six-to-twelve months.

Foreign Exchange Strategy by Chester Ntonifor
The Philippines: Can Rate Hikes Stop The Peso Slide?
Since early 2023, the Philippine peso has depreciated by 8% versus the US dollar despite the country’s central bank pushing up real policy rates by 500 basis points. BCA’s Emerging Markets Strategy argues that raising policy rates has not helped the currency…
Daily Insights
South Africa: What Is The Optimum Policy?
South African stocks, domestic bonds, and currency have all rallied since BCA’s Emerging Markets Strategy team upgraded South African assets last month following the formation of the new national unity government. The rally's persistence, however, will depend…
Daily Insights
Japan: A Virtuous Wage-Price Cycle?
Japanese wage growth fell below expectations in May, expanding by 1.9% y/y versus consensus estimates calling for a 2.1% y/y increase. Although this marks an acceleration from April’s 1.6% y/y, that figure was revised down meaningfully from 2.1% y/y.…
Daily Insights
The PBoC Will Resist a Swift RMB Devaluation
The Chinese currency has been under considerable depreciation pressure due to capital outflows. Additionally, the economy is grappling with debt deflation and a balance sheet recession, conditions that typically call for lower interest rates and a weaker…
Daily Insights
UK Labour Win Will Benefit The Pound
The Labour Party won the UK election, just as BCA Research’s Geopolitical Strategy service predicted back in 2022. However, this win is unlikely to rock the proverbial geopolitical boat. Popular enthusiasm for Sir Keir Starmer and his party is muted, and…
Daily Insights
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Will China Devalue The Yuan Significantly?
Special Report

Is the RMB cheap or expensive? Based on trade accounts, the yuan is inexpensive, but the RMB is vulnerable due to capital outflows. Yet, Beijing will not resort to a rapid devaluation for now, and the option of floating the currency is improbable. The PBoC will allow a gradual depreciation of the yuan versus the dollar, say around 5%, in the next six months.

Emerging Markets Strategy by Arthur Budaghyan
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Month-In-Review: Monetary Versus Fiscal Policy

In this week's report, we review the impact of political developments, as well as incoming fundamental data, on our positioning.

Foreign Exchange Strategy, Global Fixed Income Strategy by Chester Ntonifor
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Labour Won In Britain: So What?

The new Labour government will have flexibility to respond to macro shocks, which is positive for the UK in general, namely GBP-EUR, and also gilts in absolute terms. But over the long run, tax hikes will likely surprise to the upside, which poses a risk to corporate earnings.

Geopolitical Strategy, European Investment Strategy by Matt Gertken
Will The Greenback Continue To Appreciate?
The trade-weighted US dollar ranked among the top performing major asset classes we track in June. It hit a low on June 3rd and has appreciated by 1.5% since then. This is despite no change in short-end rate differentials and an outright narrowing in long-end…
Daily Insights

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