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18 Jun 2013
Flash: G4 market volatility on the horizon – RBS
FXstreet.com (New York) - The past fortnight has challenged many of the market’s most closely held views and positions.
In fact, there’s almost been a perfect storm in terms of news and events. According to the RBS Research Team, “Significantly greater volatility in Japanese equities and government bonds has continued to shake long USD/JPY positions. Weaker US data have challenged positions that try to take advantage of a relative outperformance of the US economy versus Europe.”
A combination of weaker external demand and higher global real yields has seen investors revisit their view that emerging market and commodity currencies have room to appreciate against the G4. This looks to have driven a recovery in the EUR, GBP, CHF and JPY against high beta currencies and the USD. Portfolio inflows into commodity and emerging markets assets in recent years have been significant. “It would therefore seem likely that markets will remain more volatile for some time to come.” the team adds.
In fact, there’s almost been a perfect storm in terms of news and events. According to the RBS Research Team, “Significantly greater volatility in Japanese equities and government bonds has continued to shake long USD/JPY positions. Weaker US data have challenged positions that try to take advantage of a relative outperformance of the US economy versus Europe.”
A combination of weaker external demand and higher global real yields has seen investors revisit their view that emerging market and commodity currencies have room to appreciate against the G4. This looks to have driven a recovery in the EUR, GBP, CHF and JPY against high beta currencies and the USD. Portfolio inflows into commodity and emerging markets assets in recent years have been significant. “It would therefore seem likely that markets will remain more volatile for some time to come.” the team adds.