Subscribe to RSS

EUR/USD, USD/JPY: Is The Divergence Trade Dead? – Credit Agricole

The USD has emerged as one of the biggest losers from the recent shock CNY devaluation. The recent USD losses were particularly pronounced against the ‘funding’ currencies – EUR and JPY. This development highlighted the importance of risk-aversion as an FX driver that, at times, has a stronger impact on the USD-crosses than other factors like policy divergence. Indeed, the correlation between risk-aversion and USD has shifted dramatically, with the USD increasingly behaving like a high-beta rather than safe-haven currency

Looking ahead, we expect risk-aversion to play an important role as driver of G10 FX markets as Fed lift-off draws near. The outperformance of USD against EUR and JPY on the back of growing Fed tightening bets and persistent dovishness of the ECB and the BoJ should thus continue to be punctuated by spikes in risk-aversion

We do not believe that the current developments in China will lead the Fed to change its policy outlook for higher rates this year. In addition, falling inflation expectations in the Eurozone and Japan coupled with undesirable FX appreciation could bring forward policy action (QE and/or verbal intervention) by the BoJ and the ECB.

e-Institutional Views

We suspect, however, that investors have been too quick to scupper the policy divergence trade and sell USD against the ‘funding currencies’ EUR and JPY.

The decoupling trade could resume before long and support USD in coming months. Our econometric analysis further suggests that the relative policy outlook has been the dominant driver of EUR/USD and USD/JPY in recent years and that risk-aversion had only a secondary, and often transient, statistically insignificant impact.

'This content has been provided under specific arrangement with eFXnews.'

0 commentsback to post

Add your comment

Nickname:
E-mail:
Website:
Comment:

Other articlesgo to homepage

$10 Binary Options No Deposit Bonus – Hirose UK

$10 Binary Options No Deposit Bonus – Hirose UK(0)

$10 Binary Options Free No Deposit Bonus Campaign is available for new clients who open a Binary Option Account. It’s that simple. Link: $10 Free No Deposit Bonus Link: 50% First Deposit Bonus Available to: All new Binary Option Account Validity Date: 31 December 2017 Bonus Offer: $10 Binary Options Free No Deposit Bonus Campaign

$30 Free Bonus Plus 30% Deposit Bonus – Ayrex

$30 Free Bonus Plus 30% Deposit Bonus – Ayrex(0)

$30 Binary Options No Deposit Bonus to all New activated Clients. Ayrex presents its very first Binary Options No Deposit Bonus for new traders. Sign up to get FREE $30 and turn them into a fully withdrawable $200! This bonus allows you to profit without making an investment and trade binary options risk-free. Link:  $30

$50 Forex No Deposit Bonus Exclusive Offer – FortFS

$50 Forex No Deposit Bonus Exclusive Offer – FortFS(0)

$50 Forex No Deposit Bonus Exclusive Offer to New and Existing Traders. The $50 Forex No Deposit Welcome Bonus can be received within the promotional time period, from 28.11.2016 to 07.12.2016 inclusive. Link:  $50 Forex No Deposit Welcome Bonus Link:  Up to 50% Bonus of Every Deposit Link:  15% Support Margin Bonus Available to: New

$25 Countdown Forex Bonus Promotion 2017 – ForexTime

$25 Countdown Forex Bonus Promotion 2017 – ForexTime(0)

$25 Countdown Forex Bonus Promotion 2017 new and existing will be eligible traders. ForexTime is offering by receive a $25 credit bonus when they make a deposit of $300 into their accounts*. Link:  $25 Countdown Credit Bonus 2017 Link:  Loyalty Cashback Promotions Link:  $4 Cashback back for every lot Ending Date: 31 December 2016 Available

100% US NFP Bonus Promotion December 2016 – Xtrade

100% US NFP Bonus Promotion December 2016 – Xtrade(0)

Up to 100% Deposit Bonus Promotion to All New and Existing Customers. December 2016 US NFP Announcement Deposit NOW $1000 to $5000 and receive 100% bonus! Link:  $50 No Deposit Bonus Promotion Link: 100% Deposit Bonus Promotion Link:  Free Flight Tickets to Madrid Available to: All New and Existing Customers Bonus Ending Date: Valid 01/12

100% Welcome Bonus Plus Risk Free Trade – Trade12

100% Welcome Bonus Plus Risk Free Trade – Trade12(0)

Get 100% Welcome Deposit Bonus and 7-day risk free trade, Boost your trading with a free 100% Welcome Deposit Bonus to your Live Trading Account. Link:  Get 100% Welcome Bonus Link: 50% Exclusive Deposit Bonus Available to: All new clients Ending Date: 31 December 2016 Bonus Offer: Get 100% Welcome Deposit Bonus Plus 7-day risk

Get 25% Credit Bonus on their first Deposit – HYCM

Get 25% Credit Bonus on their first Deposit – HYCM(0)

25% Credit Bonus available on your Deposits. Experience Some of HYCM New Features, Services and Offers Receive 25% Forex trading credit bonus Link:  25% Trading Bonus on your Deposits Ending Date:  31 December 2016 Available to:   New Clients only Bonus Offer: 25% Trading Bonus Available on your deposits to New Clients only. This promotion is

$300 Free win Forex Trading Credit Bonus – easyMarkets

$300 Free win Forex Trading Credit Bonus – easyMarkets(0)

$300 Free win Forex Trading Credit Bonus to all new and existing clients. Answer the weekend quiz and fill the form with your correct and accurate contact details. Link:  50% Deposit Bonus Up to $2000 Link:  $300 Free win Trading Credit Bonus Link:  $25 Forex No Deposit Bonus Available to: All new and existing clients.

$25 Free Bonus Forex & Binary Options – MarketsYes

$25 Free Bonus Forex & Binary Options – MarketsYes(0)

$25 No Deposit Bonus Forex / CFD & Binary Options. in order to get the No Deposit Bonus they must register and during the registration it will be a place to paste the coupon code: wl25cm . Link: $25 Free Bonus Forex / CFD & Binary Options Available to: All New Traders. Ending Date: 31

$50 No Deposit Forex Welcome Bonus – Fort Financial

$50 No Deposit Forex Welcome Bonus – Fort Financial(0)

$50 No Deposit Forex Welcome Bonus to New and Existing Traders. The $50 No Deposit Forex Welcome Bonus can be received within the promotional time period, from 28.11.2016 to 07.12.2016 inclusive. Link: $50 Forex No Deposit Welcome Bonus Link: Up to 50% Bonus of Every Deposit Link: 15% Support Margin Bonus Available to: New and

read more

Forex Featured Broker

Contacts and information

ForexDepositNews.com Forex Deposit Bonus, Forex No Deposit Bonus, Forex Live Contest, Forex Demo Contest, Free Forex Bonus Forex Brokers Review and Other All Forex promotions.

ForexDepositNews.com

Social networks

Most popular categories