13 Jan 2015
Out-turn in commodities not imminent - JPMorgan
FXStreet (Bali) - The FX Strategy Team at JP Morgan shares their overall market view, noting that the outturn in commodities - one of the worst periods in the last 45 years - doesn’t look imminent.
Key Quotes
"One week into the New Year and 2015 is looking as messy as 2014, with oil down 13%, some currencies off 2%-3% and FX liquidity by some measures worse than during the EMU Crisis/taper tantrum. Most recent news has been low-drama, oil continues to search for an anchor postOPEC and Greek elections have revived EMU exit risk."
"The muck created by these two issues deserves some longer-term perspective, though our conclusions do not alter the portfolio strategy much. The current bear market in commodities is one of the worst of the past 45 years, but like previous bottoms in the commodity price cycle, supply needs to fall deliberately or accidentally. That outturn doesn’t look imminent."
"With Greece, hypothetical EMU exit with European firewalls implies EUR/USD around 1.05 and 1-yr implied vol near 13%, so moves akin to an ordinary recession without an existential crisis. Stay long USD but add hedges."
Key Quotes
"One week into the New Year and 2015 is looking as messy as 2014, with oil down 13%, some currencies off 2%-3% and FX liquidity by some measures worse than during the EMU Crisis/taper tantrum. Most recent news has been low-drama, oil continues to search for an anchor postOPEC and Greek elections have revived EMU exit risk."
"The muck created by these two issues deserves some longer-term perspective, though our conclusions do not alter the portfolio strategy much. The current bear market in commodities is one of the worst of the past 45 years, but like previous bottoms in the commodity price cycle, supply needs to fall deliberately or accidentally. That outturn doesn’t look imminent."
"With Greece, hypothetical EMU exit with European firewalls implies EUR/USD around 1.05 and 1-yr implied vol near 13%, so moves akin to an ordinary recession without an existential crisis. Stay long USD but add hedges."