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27 Mar 2015
Asian FX: divergent trends for the next 1-2 weeks? – Westpac
FXStreet (Barcelona) - Jonathan Cavenagh of Westpac, notes that that divergent trends within EM Asia FX may emerge over the coming few weeks, which is likely to create some relative value opportunities.
Key Quotes
“It is fair to say that a number of USD/Asia have fallen more than we anticipated since the FOMC statement from just over a week ago.”
“..we highlight that our overriding bias of buying dips in USD/Asia pairs remains in place. However, the safest way to play USD/Asia over the coming week could be on a relative value basis. The threat of more elevated risk aversion, higher oil prices and capital outflows from the region could drive divergent FX performances within the region.”
“…we are cautious on the outlook for the likes of KRW, INR, IDR and PHP. Higher levels of risk aversion create the risk of fund outflows from these economies and this is only likely to be accentuated by further upside momentum in oil prices.”
“We suspect perceived safe havens like CNH and SGD are likely to outperform against such a backdrop. We could also see MYR outperformance, although this will very much be contingent on a further recovery in oil prices.”
“Tactical trades that we like under such a scenario are long CNH/KRW and long SGD/PHP.”
Key Quotes
“It is fair to say that a number of USD/Asia have fallen more than we anticipated since the FOMC statement from just over a week ago.”
“..we highlight that our overriding bias of buying dips in USD/Asia pairs remains in place. However, the safest way to play USD/Asia over the coming week could be on a relative value basis. The threat of more elevated risk aversion, higher oil prices and capital outflows from the region could drive divergent FX performances within the region.”
“…we are cautious on the outlook for the likes of KRW, INR, IDR and PHP. Higher levels of risk aversion create the risk of fund outflows from these economies and this is only likely to be accentuated by further upside momentum in oil prices.”
“We suspect perceived safe havens like CNH and SGD are likely to outperform against such a backdrop. We could also see MYR outperformance, although this will very much be contingent on a further recovery in oil prices.”
“Tactical trades that we like under such a scenario are long CNH/KRW and long SGD/PHP.”