GulfBase Live Support
12/02/2018 05:55 AST
The latest turbulence in China’s yuan only adds to the complexity of a bruising stretch for global currency markets. Yet for some money managers and strategists, the path forward couldn’t be more simple: a weaker dollar.
For these observers, the dollar’s rebound amid the biggest burst of foreign-exchange volatility since 2015 is bound to be short-lived. The Bank of England reminded investors on Thursday of the robust growth outlook overseas, and the investment opportunities that are luring cash from the US. Traders are also on alert for signs that other central banks are joining the Federal Reserve in withdrawing stimulus.
While the greenback could benefit from haven buying as a result of the turmoil in equities, that support could soon dissipate: The backdrop for the dollar remains bearish for the next 12 months, according to Eaton Vance Corp’s Eric Stein.
“You would expect we’d be in a higher volatility world for a variety of asset classes, and FX is one of them,” said Stein, co-director of global fixed income. “Global growth is good, and that has tended to a weaker dollar. Medium-term, given that the US is later in the cycle, you’re probably in for a period of dollar weakness.”
Greenback losses versus euro losses
Positioning in the options market also suggests that traders are banking on the dollar to extend last year’s almost 9 per cent decline.
For example, three-month risk reversals, a barometer of sentiment and investor positioning, show that the cost of protecting against dollar losses versus the yen exceeds the cost to hedge dollar gains, by the most in almost a year. And investors still favour greenback losses versus the euro.
That indicates the dollar stands to fall even as volatility climbs on the heels of shifting monetary policy, according to Bipan Rai, North American head of foreign-exchange strategy at Canadian Imperial Bank of Commerce.
“There’s been this view over the last several years that rising volatility is generally bullish for the dollar, but that’s not always the case,” he said. “Rising volatility doesn’t necessarily have to correlate to a stronger dollar rather than a stronger euro or stronger yen.”
Gulf News
Ticker | Price | Volume |
---|---|---|
SABIC | 114.77 | 5,915,941 |
US Dollar | 1.00 |
Saudi Riyal | 3.75 |
Derham Emirati | 3.67 |
Qatari Riyal | 3.65 |
Kuwaiti Dinar | 0.30 |
Bahraini Dinar | 0.38 |
Omani Riyal | 0.39 |
Euro | 0.81 |
British Pound | 0.71 |
Japanese Yen | 104.70 |
05/04/2018
Oman has the means to maintain its currency peg and has no plans to change it even though the decline in oil prices has hurt its finances, central bank Governor Tahir Al Amri said.
Oman’s g
Gulf News
02/04/2018
China’s yuan firmed against the dollar on Friday and is set to post its biggest quarterly gain in a decade, as the country attracts capital inflows and US trade frictions bolstered expectations of a
Gulf News
01/04/2018
The US dollar’s share of currency reserves reported to the International Monetary Fund declined in the final quarter of 2017 to a four-year low, as other currencies’ shares of reserves grew, data rel
Gulf News
29/03/2018
The US Dollar Index, a measure of the value of the US dollar against a basket of currencies, teetered and dropped to quarterly lows in March, which also happen to be the lowest the index has been sin
The National
29/03/2018
Turkey’s lira weakened beyond the psychologically important level of 4.0 to the US dollar yesterday, bringing it close to a record low, as concerns about double-digit inflation, and politics, continu
Gulf Times