The DXY failed to break below the 89 critical resistance level earlier this year and has instead been appreciating since the beginning of June. The global growth scare which is testing the reflation narrative is fueling the rally…
Highlights The ECB has changed its inflation target, but its credibility remains weak. Inflation will not allow the ECB to tighten policy anytime soon. Instead, the ECB will have to add to its asset purchase program next year and may…
Highlights The dollar smile theory was valid around the COVID-19 crisis but does not stand the test of time. A more useful framework for determining the long-term trend in the dollar is observing global business cycle dynamics. The…
Highlights It is too early to conclude that the PBoC’s surprise rate cut last Friday to its reserve requirement ratio (RRR) marks the beginning of another policy easing cycle. Historically it took more than a single RRR…
Feature Since the end of the first quarter, the decline in Treasury yields has been the most important trend in global financial markets. It has contributed to the return of the outperformance of growth stocks relative to value stocks,…
Highlights Our sense remains that the dollar is undergoing a countertrend bounce, rather than entering a new bull market. The litmus test for this view is if the DXY fails to break above the 93-94 level that marked the March highs.…
The central bank’s efforts to sterilize inflows of US dollars from the IMF have inadvertently led to considerably tighter monetary conditions. Not only has the currency appreciated a lot but also market interest rates have…
The broad trade-weighted US dollar has been consolidating since early this year. If the greenback fails to break decisively above its 200-day moving average, a major down leg will develop. On the contrary, if this broad trade-…
Highlights Three distinct forces are likely to make South Asia’s geopolitical risks increasingly relevant to global investors. First, India’s tensions with China stem from China’s growing foreign policy assertiveness…