Breaking News
0

FX Talking: It’s Happening (Outside Of G3)

www.investing.com/analysis/fx-talking-its-all-happening-outside-of-g3-200398567
FX Talking: It’s Happening (Outside Of G3)
By ING Economic and Financial Analysis   |  Mar 18, 2019 08:19AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Flat yield curves and the prospect of unchanged G3 monetary policy into 2020 have seen volatility collapse across G3 FX pairs. Yet there’s plenty going on elsewhere with Brexit, tightening in Eastern Europe and a re-assessment of some Asian FX trends. Local stories and relative value will be in focus this month

By Chris Turner and Petr Krpata

Executive summary

The ECB’s decision to extend its forward guidance into year-end has smashed interest rate and FX volatility in Europe. EUR/USD implied volatility has dropped back to levels last seen in 2014. We see EUR/USD staying subdued into 2Q19 with potential to drop closer to 1.10 if, as we believe, the Fed will be in a position to hike rates in 3Q19.

But low volatility in the Eurozone masks the fireworks of Brexit. March will be make-your-mind-up time for the pound. There is a potentially bullish cocktail out there of a long delay/fiscal stimulus/rate hike, but key votes later in March will determine whether GBP can fulfil its potential. Clearer stories exist in Norway and Hungary where high inflation should prompt tighter policy and further strength in both the NOK and HUF.

Lower volatility also helps carry trades by increasing risk-adjusted returns. If, and it’s a big if, trade tensions do not flare up again and European activity can start to recover (there are early signs) then emerging markets should do well. Here we favor the high yield MXN, which should substantially outperform its forward curve. However, watch out for the high yield RUB. Current levels may be the best of the year before the current account deteriorates and the US sanctions threat re-appears this summer. A new central bank governor also poses a threat to what was the outperforming PHP.

Content Disclaimer
This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

FX Talking: It’s Happening (Outside Of G3)
 
FX Talking: It’s Happening (Outside Of G3)

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email