Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

FX & Rates

<ul>
<li>In an environment marked by uncertainty with regards to the dollar's next move, EM currencies have been stable and LatAm currencies have outperformed Asia and CEEMEA so far this year.</li>
<li>The strong start for LatAm currencies is partly to make up for their underperformance last year and partly supported by their high carry relative to other currencies.</li>
<li>If risk aversion remains low, this trend should persist but given the uncertainty, it is best to be selective and target relative-value trades to take advantage of differences across countries.</li>
</ul>


In an environment marked by uncertainty with regards to the dollar's next move, EM currencies have been stable and LatAm currencies have outperformed Asia and CEEMEA so far this year.
The strong start for LatAm currencies is partly to make up for their underperformance last year and partly supported by their high carry relative to other currencies.
If risk aversion remains low, this trend should persist but given the uncertainty, it is best to be selective and target relative-value trades to take advantage of differences across countries.


Will Latin American Currencies Continue to Outperform Against Asia and CEEMEA?

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Thomas Schroeder

Chart based progressive global trading strategies

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Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

EURO STOXX 50 Price EUR / Technical Analysis

<ul>
<li>Big supports are under pressure in Europe on Ukraine tensions amid a strong USD/RUB thrust that shows potential to bleed into the global cycle.</li>
<li>Eurostoxx 50 4,000 support and DAX 14,900 are under pressure/breaking down. Both indices must re take key support to avert a painful decline.</li>
<li>USD/RUB is bullish above 75 with the next threshold at 81, above would target 85.</li>
</ul>


Big supports are under pressure in Europe on Ukraine tensions amid a strong USD/RUB thrust that shows potential to bleed into the global cycle.
Eurostoxx 50 4,000 support and DAX 14,900 are under pressure/breaking down. Both indices must re take key support to avert a painful decline.
USD/RUB is bullish above 75 with the next threshold at 81, above would target 85.


Europe Support Breaks and USD/RUB Breaking Higher

<ul>
<li>The turnaround of Asian currencies is likely to continue with growth resurfacing in the region ex-China and the interest rate differential with the rest of emerging markets narrowing.</li>
<li>The main risks to watch are whether the slowdown in China worsens and weighs on the region as a whole and whether central banks embark on FX interventions again.</li>
<li>While the overall view on Asian currencies is constructive, I prefer cross-country trades to take advantage of differences arising from idiosyncratic drivers and to eliminate the dollar risk.</li>
</ul>


The turnaround of Asian currencies is likely to continue with growth resurfacing in the region ex-China and the interest rate differential with the rest of emerging markets narrowing.
The main risks to watch are whether the slowdown in China worsens and weighs on the region as a whole and whether central banks embark on FX interventions again.
While the overall view on Asian currencies is constructive, I prefer cross-country trades to take advantage of differences arising from idiosyncratic drivers and to eliminate the dollar risk.


Drivers Behind the Turnaround of Asian Currencies

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Cross Asset Strategy

<ul>
<li>A new threat to financial markets may be on the cards, with a potential incursion of Ukraine by Russia.</li>
<li>While the probability of war remains slim at best, such an event could still lead to extreme movements across every sector in the market, including stocks, commodities and bonds.</li>
<li>Energy Markets could be the primary source of volatility if tensions between the two countries turn into conflict</li>
</ul>


A new threat to financial markets may be on the cards, with a potential incursion of Ukraine by Russia.
While the probability of war remains slim at best, such an event could still lead to extreme movements across every sector in the market, including stocks, commodities and bonds.
Energy Markets could be the primary source of volatility if tensions between the two countries turn into conflict


Predicting the Impact of a Russia-Ukraine Conflict on Wall Street

<ul>
<li>The US dollar has started appreciating again on the back of a safe-haven bid with risk aversion rising due to the Fed's upcoming rate-hiking cycle and the Russia-Ukraine tensions.</li>
<li>Given my expectation of rising dollar volatility, I had recommended hedging a diversified EMFX portfolio with the euro. Indeed, the euro hedge has worked well over the past three months.</li>
<li>I continue to prescribe maintaining the euro hedge. If the dollar remains volatile, I don't expect the low volatility of EM currencies – dragged lower by Asia – to persist. </li>
</ul>


The US dollar has started appreciating again on the back of a safe-haven bid with risk aversion rising due to the Fed's upcoming rate-hiking cycle and the Russia-Ukraine tensions.
Given my expectation of rising dollar volatility, I had recommended hedging a diversified EMFX portfolio with the euro. Indeed, the euro hedge has worked well over the past three months.
I continue to prescribe maintaining the euro hedge. If the dollar remains volatile, I don't expect the low volatility of EM currencies – dragged lower by Asia – to persist. 


Value of Euro as a Hedge for EM Currencies in Times Like These

Russia

The Russian ruble is the official currency of The Russian Federation. 

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Will Latin American Currencies Continue to Outperform Against Asia and CEEMEA?

If risk aversion remains low, LatAm currencies should continue to outperform but given the uncertainty, it is best to target relative-value trades...

Gautam Jain, PhD, CFA

Europe Support Breaks and USD/RUB Breaking Higher

Big supports are under pressure in Europe on Ukraine tensions amid a strong USD/RUB thrust that shows potential to bleed into the global cycle.

Thomas Schroeder

Drivers Behind the Turnaround of Asian Currencies

The turnaround of Asian currencies is likely to continue with growth resurfacing in the region ex-China and interest rate differential with the...

Gautam Jain, PhD, CFA

Predicting the Impact of a Russia-Ukraine Conflict on Wall Street

A new threat to financial markets may be on the cards, with a potential incursion of Ukraine by Russia. While the probability of war remains slim...

subSPAC

Value of Euro as a Hedge for EM Currencies in Times Like These

Given my expectation that the dollar should remain volatile in the near term, I continue to recommend maintaining a euro hedge for a diversified...

Gautam Jain, PhD, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)