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Picking Winners Among The G10 High-Beta Currencies
Picking Winners Among The G10 High-Beta Currencies
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*
The global recovery and
the fading of China- and EMU-related risks should boost G10
high-beta FX.
*
High-beta currencies have
diverged since October, largely reflecting shifts in market
pricing relative to fundamentals, rather than trends in
fundamentals alone. The divergence creates some scope for
catch-up by the laggards NZD, NOK and SEK.
*
CAD appears rich relative to its high-frequency drivers,
while the other G10 high-beta currencies are somewhat
cheap.
*
Near-term divergence likely will
reflect more shifts in policy expectations. A late-May shift
in RBNZ rhetoric could deal a body blow to NZD.
*
The BoC’s April policy report should lay the ground work
for rate hikes in 2H, supporting CAD.
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