In brief from ANZ’s monthly forex outlookOUTLOOK AND STRATEGY
- Politics has had an outsized negative impact on the USD and this is due to reverse, however the broader environment suggests that the reversal could be more selective.
- Monetary policy is playing less of a role in supporting the USD as other central banks shift their biases and as strong global growth and low volatility remain supportive of cyclical currencies.
- We favour being long the USD against low yielding currencies like the JPY, but think that the broader environment will place a solid floor under cyclical currencies.
- We favour buying JPY crosses on dips.