FX markets are approaching a paradigm shift - ANZ

Daniel Been, Research Analyst at ANZ suggests that their strategic indicators are continuing to add weight to their view that FX markets are approaching a paradigm shift.

Key Quotes

“Official and funding liquidity have both peaked; while polarisation has touched unsustainably low levels, and underlying economic volatility has started to rise. All of this suggests that market volatility is troughing, and the next major move will be higher.”

“More tactically however, these indicators provide little information about how to manage currency risk in the next month. There, markets are caught between extended momentum and absent catalysts.” 

“We think the USD has weakened too much and we cautiously maintain our long recommendations. But we prefer to look for tactical opportunities in crosses, utilising both relative economic views and short term models.”