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29 Jul 2015
USD/Asia should move higher unless Fed turns dovish – RBS
FXStreet (Mumbai) - The FX strategy team at RBS believes the Asian currencies could dip against the USD as weak Asian fundamentals would lead to more dovish monetary policies across Asia.
Key Quotes
“Growth is a trouble for Asia with both external and domestic indicators of economic activity stuck at a suboptimal level. From exports to domestic retail sales to manufacturing, economic data releases have been weak across the region.”
“The low level of activity is likely to result in easier monetary policies in several Asian economies, i.e. monetary policy is set to diverge from that of the US. Countries where monetary easing is becoming imminent are China, India, Korea, Singapore and Thailand.”
“Policy divergence and weak growth imply a greater tolerance for FX depreciation. USD/Asia should continue to trade higher unless the Fed unambiguously signals a subdued pace of rate normalisation and/or Asia’s growth trajectory materially improves.”
Key Quotes
“Growth is a trouble for Asia with both external and domestic indicators of economic activity stuck at a suboptimal level. From exports to domestic retail sales to manufacturing, economic data releases have been weak across the region.”
“The low level of activity is likely to result in easier monetary policies in several Asian economies, i.e. monetary policy is set to diverge from that of the US. Countries where monetary easing is becoming imminent are China, India, Korea, Singapore and Thailand.”
“Policy divergence and weak growth imply a greater tolerance for FX depreciation. USD/Asia should continue to trade higher unless the Fed unambiguously signals a subdued pace of rate normalisation and/or Asia’s growth trajectory materially improves.”