Forex Flash: USD rally a product of global macro risks – ANZ

According to the Head of Global Markets Research Richard Yetsenga at ANZ, “The rally in the dollar since January appears to be little more than a reflection of heightened global macro risks. These same macro risks, however, are likely to see the core central banks retain an easy monetary policy stance, and encourage an ongoing rotation out of fixed income, into equities and other risky assets.”

With the wide US external deficit almost entirely funded by Treasury bond flows in recent years, the broad US dollar remains exposed to this shift. Selected Asian currencies and the EUR remain best placed to benefit from this shift, and the AUD and NZD are likely to continue trading at high levels.