Asia: Inflows break USD correlations – BNPP

Mirza Baig, Head of FX & IR Asia Strategy at BNP Paribas, notes that the USD rallies versus Asian FX are muted and sell-downs are proving more powerful.  

Key Quotes

“Portfolio inflows are picking up again, which could continue as long as the global reflation narrative is supported by data.”

“Asian central banks appear reluctant to intervene, possibly due to concerns of being labelled a ‘currency manipulator’.”

“While speculative long USD positions have been unwound, the market is not significantly long Asian currencies, which suggests the pain trade is for further strength in the near term.”