There is no doubt we are living through times where the established rules are breaking down. A good example of this is that the Australian dollar is rallying into a US downturn, whereas it is traditionally the biggest under-performer. However, a new way of looking at the world does not mean ignoring the negatives. Downgrading of the banks, the setback in commodity prices, worries over China should have seen the AUD under-perform. This leads us to the conclusion that the market is buying the AUD for old fashioned yield play and the new fundamentals are fully priced into the AUD. Ultimately the AUD will have to correct.
Turkey: the clock is ticking for the Lira.
Since our report published in March the panorama for the Turkish lira has not changed. If anything, the FX vulnerability has increased. We retain our bearish view as the premium is too low for the macroeconomic risks and believe that the risk of further and sharp weakening of the lira persists.
Click here to read the full report:
http://www.easyforexnews.net/uploads/2011/06/300110.pdf
HSBC Global Research