23 Aug 2013
Flash: Resource exporting currencies, NZD, AUD, CAD, NOK - BMO
FXstreet.com (Barcelona) - Stephen Gallo, Head of European Currency Strategy at BMO suggests that the resource exporting currencies of the G10 have one common feature.
Key Quotes:
“As we’ve written before, the advent of QE tapering and its corresponding flows have allowed a range of currencies to be re-priced on the basis of fundamentals, and there appears to be two adjustments taking place at present: one in the developing world and another, less distressful one, within the G10 space; even the NZD is starting to underperform on a relative value basis a bit, thanks to Wheeler’s recent “macro-pru” intervention”.
“Within G10, the one common feature of the most popular basket of resource-exporting currencies (NZD, AUD, CAD, NOK) is that their non-resource trade balances are all in the red (or more in the red than their total trade balances”).
“By and large, this is good for FX market players, as FX’s role in “rebalancing” is currently well aligned with the reason those players are here in the first place: to make money So FX markets are in a unique position given the role that exchange rates play in external adjustment”.
Key Quotes:
“As we’ve written before, the advent of QE tapering and its corresponding flows have allowed a range of currencies to be re-priced on the basis of fundamentals, and there appears to be two adjustments taking place at present: one in the developing world and another, less distressful one, within the G10 space; even the NZD is starting to underperform on a relative value basis a bit, thanks to Wheeler’s recent “macro-pru” intervention”.
“Within G10, the one common feature of the most popular basket of resource-exporting currencies (NZD, AUD, CAD, NOK) is that their non-resource trade balances are all in the red (or more in the red than their total trade balances”).
“By and large, this is good for FX market players, as FX’s role in “rebalancing” is currently well aligned with the reason those players are here in the first place: to make money So FX markets are in a unique position given the role that exchange rates play in external adjustment”.