ANZ Research outlines the key points of its current broad investment strategy.
"1- Risk appetite will become a more important driver of the currency market again, paring back some of the USD’s dominance.
2. Tighter global liquidity will undermine the market’s tolerance of poor news, leaving the market vulnerable to a rolling series of shocks as uncertainty in policy and politics rises.
3. Global growth will slow sooner than the market anticipates, driving an evolution in the risk cycle where shocks become less idiosyncratic and more systemic.
4. As such, the average level of volatility will remain higher, flows to emerging markets (EM) are likely to reverse and currencies that are influenced by the global cycle (AUD, NZD and many in Asia) would underperform," ANZ argues.