Asia FX: Q4 dollar strength redux? - ANZ

Khoon Goh, Head of Asia Research at ANZ explains that if recent history is any guide, the USD tends to appreciate against Asian currencies during the final quarter of the year and with the US Federal Reserve set to hike in December and prospects for tax reform to be USD positive, we could be in for a repeat.

Key Quotes

“But a better global growth backdrop, not to mention continued efforts by the Chinese authorities to keep the RMB stable, should limit the extent of Asian currency relapse into year-end.”

“Positioning and foreign portfolio flows will ultimately dictate the extent of Asian currency retracement.”

“We see low yielding and equity sensitive currencies in Asia as more susceptible in the event of further dollar strength.”