G10 fair value update: Scandies And Swissie cheap

G10 fair value update: EUR and USD fair, Scandies and Swissie cheap

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• The fair value exchange rates of the core and high-beta G10 currencies are diverging, with government debt weighing down G-3 and GBP fair values, while high-beta FX fair values are rising.

• Real exchange rate misalignments have narrowed markedly and steadily, but the elimination of G10 mispricing vs the USD has been more erratic.

• USD, EUR, CAD, AUD and CHF are close to fairly valued. GBP, NOK and SEK are cheap, while JPY and NZD are rich, to their long-term drivers.

• Long-term valuations and cyclical/policy drivers suggest NOK, SEK, AUD, CAD, and CHF outperformance against NZD and JPY.

ENDS

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