Key themes in the FX space - AmpGFX

Greg Gibbs, Founder, Analyst, & PM at Amplifying Global FX Capital Pty Ltd, an Australian financial services company explained that the CNY has developed a steady downtrend and notes various key themes in the FX space.  

Key Quotes:

"While this is often discussed in the context of political relations between the US and China, it may just reflect the fundamental realities."

"These include policy easing in China to offset credit tightening related to increased regulatory scrutiny on shadow-finance."

"Risk metrics in the Eurozone have deteriorated further; including wider credit risk premiums for periphery sovereign and corporate bonds.  This appears to be contributing to a weaker EUR.  EUR/CHF may have room to fall after diverging from wider Italian bond spreads in the last month."

"The rise in US real yields in the last two months appears to reflect, to a significant extent, a higher term premium.  This suggests that the Fed’s balance sheet unwind may be starting to have a bigger impact, both supporting the USD and dampening global equities. The cost of hedging long EUR/USD positions over three-month terms is at a record high."