25 Mar 2016
Has the dollar bottomed? – Deutsche Bank
Daniel Brehon, Research Analyst at Deutsche Bank, tries to answer the looming question that whether the dollar has bottomed for now.
Key Quotes
“As reality sets in that the Fed is still the only game in town the dollar struggled to base before Easter. Bullard comments failed to revive pricing for the April meeting but an inventories-led commodity price plunge sent risk-off flows into treasuries.
Pressure is most evident on commodity currencies such as AUD and CAD that have enjoyed a strong rally in March as their terms-of-trade have improved. EMFX optimism may be misplaced as the necessary conditions for an EM recovery have been met but weak trade and DM event risk may yet hold EM assets back. Only time will tell if terrorism in Europe, Brexit and U.S. election risks damage risk appetite in 2016.
Market instability is increasingly considered a factor restraining dollar appreciation.”
Key Quotes
“As reality sets in that the Fed is still the only game in town the dollar struggled to base before Easter. Bullard comments failed to revive pricing for the April meeting but an inventories-led commodity price plunge sent risk-off flows into treasuries.
Pressure is most evident on commodity currencies such as AUD and CAD that have enjoyed a strong rally in March as their terms-of-trade have improved. EMFX optimism may be misplaced as the necessary conditions for an EM recovery have been met but weak trade and DM event risk may yet hold EM assets back. Only time will tell if terrorism in Europe, Brexit and U.S. election risks damage risk appetite in 2016.
Market instability is increasingly considered a factor restraining dollar appreciation.”