Our Tactical Currency View - InvestingChannel

Our Tactical Currency View

Since the Fed many non G3 currencies have made higher lows against the Dollar.  We think some weaker U.S. data today on housing along with better external data for many of the FX crosses we are watching means this trend can continue. 

Image courtesy Marco Desscouleurs: http://www.photoxpress.com/search-stock-photos-photographer/Marco+Desscouleurs/239358Emerging market currencies have been a big part of the recent outperformance of emerging market against domestic market.  

Meanwhile we think the move against the Euro by USD can continue the significant technical break we saw today of 1.38.  The ECB is confronting more deflation and will finally be addressing a move to negative real rates. 

This will only make USD flows more attractive. Also capital flows out of EU equities continues and this has been a major supporter of the current account surplus that has supported the euro somewhat artificially.

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