Nanika atta with the yen? The yen has been one of the better performing currencies this year. Certainly, Japan’s currency has no particular intrinsic appeal, nor is it a safe haven currency like the Swiss franc. However, uncertainty is toxic for the yen carry trade and we think uncertainty may last a bit longer. Our view.
German economy still struggling. Although China and the US are returning to the negotiating table, significant economic and political risks persist. The global economic situation remains fragile. Germany’s economy in particular is faltering. Thanks to German consumers’ continued spending and to the solid growth in the construction industry, no crash is in sight, for now. Our assessment.
Opportunities in emerging market currencies – Over the past month the US dollar slipped a bit from this year’s peaks, but it still remains highly valued against a broad range of currencies. While currency markets typically focus on interest rate expectations and differentials, we think big valuation gaps between currencies reflect many other, large factors. We continue to see opportunities in emerging market FX. Our thoughts on that.