Currencies to remain in their increasingly frustrating ranges - ANZ

Analysts at ANZ feel that in the next month we fear that currencies will remain in their increasingly frustrating ranges but, these ranges are becoming narrow and the probability of breakout is rising.

Key Quotes

“Importantly, we also think that we have identified the factor that will drive the break – Liquidity.”

“Policy tides are shifting and the unwind of the US Federal Reserves’ balance sheet, together with a cautious beginning to normalisation in Europe, will represent a key turning point for our liquidity indicator and will likely dominate markets in the latter part of 2017 and into 2018.”

“As a result we have flattened out the profile of our forecasts for the AUD and NZD, expecting a touch more weakness in both, and we have lowered our forecast for USD/JPY to 100 by mid-2018.”