3 Sep 2013
Flash: Looking for USD strength vs AUD, JPY - JPMorgan
FXstreet.com (Barcelona) - According to JP Morgan FX Strategist Jan Loeys, the USD is expected to strengthen against currencies linked to dovish central banks, with AUD and JPY the obvious candidates.
Key Quotes
"Weakness in AUD will also be helped by Australia’s output gap becoming more negative, in contrast to New Zealand, where the output gap is becoming more positive. Even though we were stopped out of our tactical trade on the pair this week, we continue to think the market is not fully priced for the intensification of this divergence and thus look for more downside in AUD/NZD.
"We stay neutral on EUR and GBP vs. the USD, since data continue to surprise on the upside, which has offset continued commitment to keep rates low via forward guidance."
Key Quotes
"Weakness in AUD will also be helped by Australia’s output gap becoming more negative, in contrast to New Zealand, where the output gap is becoming more positive. Even though we were stopped out of our tactical trade on the pair this week, we continue to think the market is not fully priced for the intensification of this divergence and thus look for more downside in AUD/NZD.
"We stay neutral on EUR and GBP vs. the USD, since data continue to surprise on the upside, which has offset continued commitment to keep rates low via forward guidance."