TD Research discusses the latest market conditions and likes CHF/JPY lower in the near-term.
"Market attention rests on the shift in drivers to yield curves, terms of trade, and regional growth trends. Against this central banks have tried to keep the rate and volatility genie in the bottle, fearing the impact of another tantrum. And an ongoing pandemic to boot," TD notes.
"Even so, we expect markets to pre-position for the eventual break of the current liquidity-based regime, ushering in a focus on relative growth, inflation, and select winners and losers of a new commodity cycle. It's a less singular USD theme, shifting the focus to factors like value, growth, and commodity exposure to name a few. Near-term CHFJPY should continue to push lower," TD adds.