9 Jul 2013
Flash: US maintains most liquid equity markets – ANZ
FXstreet.com (New York) - Over the past 10 months, EUR/USD has spent most of its time in a 1.28-1.32 trading range, notes Brian Martin, Senior Strategist at ANZ.
“Deviations outside of this range have proved short lived and either buying or selling opportunities as the cross has proved again to be mean reverting. Over the past three months the GBP has been in a corrective phase against the US dollar.” Martin adds. The key question now is: are we entering a period of different dynamics that drive the investment and currency process?
As the US economy recovers, the cyclical bias favors equities over bonds. US labor market participation is at record lows, so corporate profits as a percentage of GDP are expected to remain high and rise as the economy picks up. According to Martin, “The US has the deepest and most liquid equity markets in the world which, supported by its yield advantage, favor the USD and that's where capital should flow.”
“Deviations outside of this range have proved short lived and either buying or selling opportunities as the cross has proved again to be mean reverting. Over the past three months the GBP has been in a corrective phase against the US dollar.” Martin adds. The key question now is: are we entering a period of different dynamics that drive the investment and currency process?
As the US economy recovers, the cyclical bias favors equities over bonds. US labor market participation is at record lows, so corporate profits as a percentage of GDP are expected to remain high and rise as the economy picks up. According to Martin, “The US has the deepest and most liquid equity markets in the world which, supported by its yield advantage, favor the USD and that's where capital should flow.”