6 Jun 2013
Flash: High yielding AUD & NZD remain under downward pressure - BTMU
FXstreet.com (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ notes that the high yielding Australian and New Zealand dollars have remained under downward pressure in the Asian trading session as the unwinding of popular carry trades continues.
He sees that high yielding currencies, especially those with elevated current account deficits have under performed since the end of April. He writes, “Australia’s and New Zealand’s current account deficits are expected to be around 5.0% of GDP in 2013. Building investor expectations of Fed QE tapering have helped lift the yields available for funding currencies and resulted in a pick up in volatility in both the currency and fixed income markets undermining the appeal of carry trades in the near-term.” Hardman finishes by commenting that Fed QE tapering expectations have resulted in more risk averse trading conditions leading to a correction in risk assets with the MSCI world equity index having declined by around 4.5% from its peak on the 25th May although it still remains around 15% higher than lows from late last year.
He sees that high yielding currencies, especially those with elevated current account deficits have under performed since the end of April. He writes, “Australia’s and New Zealand’s current account deficits are expected to be around 5.0% of GDP in 2013. Building investor expectations of Fed QE tapering have helped lift the yields available for funding currencies and resulted in a pick up in volatility in both the currency and fixed income markets undermining the appeal of carry trades in the near-term.” Hardman finishes by commenting that Fed QE tapering expectations have resulted in more risk averse trading conditions leading to a correction in risk assets with the MSCI world equity index having declined by around 4.5% from its peak on the 25th May although it still remains around 15% higher than lows from late last year.