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Currencies

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How Returning Workers Saved The US Economy… For Now

The US ‘immaculate disinflation’ has run its course, given that labour force participation is topping out. This leaves the Fed with a dilemma. Settle for price inflation stabilising at 3 percent, and cut rates early to avoid higher unemployment. Or, not cut rates early and go the final mile to 2 percent price inflation, at the risk of higher unemployment. We discuss which way the Fed is likely to tilt, and the investment implications. Plus: China is oversold while Japan is overbought.

Counterpoint by Dhaval Joshi
BoJ: Nearing The End Of Negative Rates?
Japan’s CPI inflation dropped from 2.6% to 2.2% y/y in January. However, the sharp slowdown comes on the back of falling energy prices. Meanwhile, the BoJ’s core-core measure of underlying inflation (CPI excluding fresh food and energy) eased from 3.7% y/y to…
Daily Insights
The US Dollar Is The Most Overvalued Currency In The G20
In a recent Special Report, BCA’s Foreign Exchange Strategists update their long-term fair-value models for the real effective exchange rate. The model aims to capture deviations from the long-term drivers of a currency, such as relative productivity trends…
Daily Insights
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Currency Valuation And Long-Term Returns: Part II

In this week’s report, we release an update to our long-term REER valuation model and expected future returns for major currencies.

Foreign Exchange Strategy by Chester Ntonifor
Central Bank Diversification, Economic Uncertainty Keeps Gold Bid
According to BCA Research’s Commodity & Energy Strategy service, gold purchases by central banks will continue apace, as they diversify away from USD foreign reserves. Amid elevated geopolitical risk, arising from the Russia-Ukraine war, ongoing…
Daily Insights
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Global Risks Rebounding (GeoRisk Update)

While 2024 will see various election risks, global geopolitical uncertainty is driven by the US election and its struggle with Russia, China, and Iran. The stock market can manage local domestic political risk. But it will correct upon a major outbreak of geopolitical uncertainty.

Geopolitical Strategy by Matt Gertken
Does The Japanese Equity Rally Have Legs?
Japanese equities have outperformed their global peers since September 2022 in common currency terms. Over this period, the Nikkei 225 and the TOPIX posted gains of close to 50%. A weak yen has boosted Japanese multinationals’ foreign revenues and prompted…
Daily Insights
What's Weighing On The Copper-To-Gold Ratio?
The Global Manufacturing PMI clocked in at 50 in January – exactly on the boom-bust line. The index has been on a general uptrend since mid-2023 with the January figure marking the first non-contractionary reading since August 2022. The headline index…
Daily Insights
The NOK And Energy Security
Energy security is a focus of many governments, especially since the onset of the Russia-Ukraine conflict. One producer that is benefitting from diversification away from Russian oil and gas is Norway. This is buffeting the trade account and will provide…
Daily Insights
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How Low Can CHF Fall?

In this Insight, we speculate on the outlook for the CHF.

Foreign Exchange Strategy by Chester Ntonifor

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