The market is underestimating the upside risks to the yen. |
The news out of the U.S. the past few weeks is clearly dollar positive. |
The sell-off in high yield currencies in March has been largely an isolated occurrence, but there are risks that it could spread. |
The shift in growth sentiment supports a trend that has been developing over the past six months: namely, countries with strong external balances are beginning to look more attractive relative to countries with growing external deficits. |
The yen at current levels still looks attractive. |
The yen looks too cheap in a world where the BOJ may be removing its zero-rate policy in the months ahead. Yen fundamentals are increasingly too strong, and the currency too weak, to justify further declines. |
There is a lot of nervousness about the recovery in Europe, and people are willing to bail out of the euro very quickly. We're not convinced the euro will stage a big rally. |
There is a reasonably strong case for economic growth in Europe. |
We are not convinced that now is the time to expect more dollar weakness. |
We still think the tough talk from the ECB will not amount to outright action. |
We think the underlying momentum in the Fed policy story warrants more explicit long dollar exposure. |
We will steer clear of being long the Canadian dollar for now. |
We would view the G-7 outcome as simply another reason to be positive on Asian currencies. |
We're all passionate about what we do. But it shouldn't boil down to that. |
While deficit countries still enjoy yield advantage, the rate premium is narrowing. |