Highlights Our short EM equity index recommendation has reached our target and we are booking profits on this trade. The halt to economic activity will produce a global recession that will be worse than the one that took place in late…
Yesterday, we posited that the dollar shortage was ebbing because euro and yen cross-currency basis swap spreads were normalizing. This was the wrong call. Today, rumors that London will close is causing panic that FX liquidity…
Highlights The path of least resistance for the DXY remains up. The internal dynamics of financial markets remain constructive for the DXY. We explore more key indicators to complement the analysis in our February 28 report. Our…
Once markets stabilize, it could be tempting to buy USD/JPY; however, other factors often murky this trade. For one, the DXY has a large influence on USD/JPY. Also, the Japanese economy is very sensitive to economic gyrations in…
Highlights China should fare a global recession better than most G20 economies, given its large domestic market and powerful policy response. China is likely to frontload a large portion of its multi-year infrastructure…
Last Friday, BCA Research's Foreign Exchange Strategy service analysed the growing risk of competitive devaluation in the FX space. If the COVID-19 outbreak worsens much further, discussions around interest rate cuts will…
Highlights The latest interest rate cuts by central banks confirms the narrative that the authorities view economic risks as asymmetrical to the downside. This all but assures that competitive devaluation will become the dominant…
Highlights OPEC 2.0 ministers continue to negotiate oil production cuts to replace those expiring this month. We expect cuts of 1mm b/d – perhaps more – extending to end-June, undertaken to offset COVID-19-induced demand…
As the global reserve currency, the US dollar could always enjoy a bid when bad news about COVID-19 spirals out. However, the experience of recent weeks has been different, whereby the USD weakens when the COVID-19 crisis deepens…
Highlights An analysis on Colombia is available below. If EM share prices hold at current levels, a major rally will likely unfold. If they are unable to hold, a substantial breakdown will likely ensue. The direction of EM US dollar…