BTMU on which currency is the best safe haven and why
BTMU FX Strategy Research notes that it is no surprise that the JPY is performing well in a complicate mix of global factors prompting increased risk aversion.
In that regard, BTMU outlines 3 reasons that makes the JPY looks the best safe-haven option for now:
1- BTMU notes that the CHF has for some time been waning as a safe-haven currency as market participants see little reason to park cash there if FX gains are unlikely to offset the negative rates on offer.
2- BTMU notes that the USD as of yet is not deriving support and this is in part due to the fact that the dollar is now more of a growth / reflation currency.
3- BTMU argues that the EUR looks is a less favorable safe-haven currency especially given the surge in Italian and French 10-year yields over Germany.
"That leaves the yen. A current account surplus approaching 4% of GDP, some moderation in 5yr/5yr inflation expectations that helps lift real yields and a strong market view of the yen being unhindered (unlike the Swiss franc) at current levels versus the dollar is paving the way for yen out-performance," BTMU concloudes.
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