Industry comment

Not just one dollar for Dolly

To say that this year has been challenging for FX investors would be an understatement. Trading volumes have plunged and realized volatility has dropped to the lowest levels since the late 1970s. There is a growing feeling that markets are penned in by an unending stream of exogenous shocks and surprises. Our theme in January’s Blueprint was that Fed tapering represented the ‘thin edge of the wedge’ and that the medium-term stronger dollar trend is intact. We hold to this view, but the last few months have demonstrated there’s more to life than the greenback. In the pieces that follow we stick to the dollar theme in some currencies, go against consensus in others, embrace carry in selective EM and focus on cross-trades elsewhere. Markets may feel “penned in,” but we see plenty of opportunity!

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