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27 Jan 2014
Flash: Safe Havens adjusting to EM weakness - Danske Bank
FXstreet.com (Barcelona) - Christin Tuxen, Senior Analyst at Danske Bank notes that so far, the reaction to the EM sell-off among the majors has not been particularly USD-positive as one might have expected – traditional safe-havens such as JPY and CHF have gained.
Key Quotes
“IMM data suggest that speculators turned to these two currencies already ahead of the meagre Chinese PMI release; notably MXN suffered a move in which investors went from being net long to net short in the week to 21 January.”
“The lack of USD upside may suggest that markets are to a certain extent pricing the chance of a Fed reaction (more easing) should global growth end up taking a hit from a wider EM crisis; in contrast, an ECB reaction should possibly not be expected in such a scenario.”
“With only the German IFO a potential market mover, focus today will likely stay on ‘what’s next?’ in the EM FX sphere.”
Key Quotes
“IMM data suggest that speculators turned to these two currencies already ahead of the meagre Chinese PMI release; notably MXN suffered a move in which investors went from being net long to net short in the week to 21 January.”
“The lack of USD upside may suggest that markets are to a certain extent pricing the chance of a Fed reaction (more easing) should global growth end up taking a hit from a wider EM crisis; in contrast, an ECB reaction should possibly not be expected in such a scenario.”
“With only the German IFO a potential market mover, focus today will likely stay on ‘what’s next?’ in the EM FX sphere.”