Disinflation is topic de jour for investors, but the transmission mechanism tocurrencies is poorly understood. One narrative is that disinflationary trends willdelay policy normalization, encourage further competitive devaluation andultimately depress volatility. However, not all disinflation is created equal, andthe differing impact of subdued global prices should, if anything, cementmonetary policy divergence. Here we use our new Inflation Sensationpublication to measure 12m changes in the pulse of prices, wages andinflation expectations across G10.
Read the full report: FX Daily