18 Sep 2013
Flash: Significant moneys will come to play on FOMC - Societe Generale
FXstreet.com (London) - Sebastien Galy, Strategist at Societe Generale eyes the FOMC in terms of significant money flows and EM’s vrs the dollar.
Key Quotes:
“Investors anticipated Fed tapering building up long USD hedges vs EM, to hedge the risk their Fixed Income flatteners would suffer”.
“Since September, the process of EM hedging is reversing as tapering fears were priced in, weakening the USD across the board (EM positioning far outweighing G10 positioning). Since then G10 FX allocation seems on the rise and with the last major global risk gone, leading indicators somewhat pointing upwards, cheap valuations of high yielders (AUD, NZD vs USD and EUR for example), classical asset allocation suggests significant moneys will come to play”.
Key Quotes:
“Investors anticipated Fed tapering building up long USD hedges vs EM, to hedge the risk their Fixed Income flatteners would suffer”.
“Since September, the process of EM hedging is reversing as tapering fears were priced in, weakening the USD across the board (EM positioning far outweighing G10 positioning). Since then G10 FX allocation seems on the rise and with the last major global risk gone, leading indicators somewhat pointing upwards, cheap valuations of high yielders (AUD, NZD vs USD and EUR for example), classical asset allocation suggests significant moneys will come to play”.