Highlights Financial markets are now fully priced for an economic downturn lasting one quarter… …but they are not fully priced for a recession. To go tactically long equities versus bonds requires a high conviction that…
Since February 20th, the US dollar has significantly weakened as market participants increasingly bet on large interest rate cuts by the Fed. The euro and the yen have so far been the prime beneficiaries of this move, helped by…
After the tumultuous sell-off last week, it is important to take stock of the bigger picture. In this optic, we looked at how the market’s action over the past 30 years compares to the market phases of the 20th century, namely the…
Highlights The near-term path for the DXY remains up. Uncertainty about the trajectory of global growth is a potent tailwind. Central bank ammunition will eventually put a floor under global growth, but it remains a powerless weapon…
Highlights Global growth will quickly recover if the Covid-19 outbreak is soon controlled. If the virus's spread doesn't slow, a worldwide recession will take hold in 2020. BCA remains cyclically bullish, but tactical caution…
Once it became evident that global growth would suffer a shock from the Covid-19 outbreak, investors seeking safe-havens bid up the dollar. Oddly, the greenback is actually lagging behind real interest rate differentials. This…
China often uses a weaker currency as a key tool to minimize domestic deflationary pressures. Thanks to the weakness in the RMB, Chinese export prices to the US have fallen more than 5% in USD terms since 2014, yet, they…
A broad-based rally in the US dollar is a risk to a bullish euro view. According to BCA Research's Foreign Exchange Strategy service, that risk could catalyze a fall towards 1.03-1.04. The possibility of either a…
Highlights The breakout in the DXY indicates the investment universe could become precarious. The euro could fall to 1.04 on such an outcome. The yen and Swiss franc should outperform in this environment, barring recent weakness in…
The USD/KRW is trading at a nearly 10% premium to its Purchasing Power Parity equilibrium. Historically, when investors exchange the won at such a discount, they often benefit from FX appreciation in addition to the yield. We do…