Tapering losing influence over some trades
For the bulk of the last three quarters, markets have designated US policy and the subsequent evolution in corresponding policy differentials against G10 as the main market driver. While we still hold this to be valid, price action so far this year has failed to consolidate any such relationship. On a selective basis, some previous taperingsensitive trades have tailed off; on a broader scale, it appears the biggest interest FX markets have in assessing Fed policy is how it will impact risk appetite and equities.
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