At Any Rate Global FX: Mid-Year Outlook - Tell me something new
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Jun 27, 2025 The discussion kicks off with a bearish outlook on the U.S. dollar, analyzing its disconnect from current market trends. The conversation shifts to Japan's financial landscape, especially how elections could affect the yen and government bonds. Insights into the evolving yen-dollar relationship reveal potential shifts in currency stability. The hosts also explore economic recoveries in Australia and New Zealand, discussing how these shape labor markets. Finally, they delve into global hedging strategies and the impacts of political changes on emerging market currencies.
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Dollar's Bearish Trend Validated
- The dollar's decoupling from U.S. rates and equities is expected and signals a continued bearish trend.
- Global holdings of U.S. equities show the world remains long the dollar via equities, influencing positioning nuances.
Japan Foreign Investment Repatriation
- Large-scale Japanese repatriation of foreign bond investments is unlikely in the near term.
- Pension funds and life insurers tend to rebalance rather than one-way repatriation, with hedging costs a current priority.
Japan Election Risks to Yen
- The July 20th Japanese Upper House election might risk yen depreciation if the ruling coalition loses majority.
- Opposition's fiscal expansionary policies contrast with the ruling party's mild cash handouts, impacting currency outlook.