Reuters polled analysts on the ‘reflation ‘ trade with most expecting it to continue at least another month.
- 50 of 65 strategists, in response to an additional question predicted moves in currency markets based on an upswing in economic activity and prices, or the reflation trade, would continue for at least another month, including 33 who said over three months.
The piece was published Thursday.
In it was a forecast for the EUR/USD at 1.25 in 12 months (same as the January and February polling).
Some of the remarks conveyed by Reuters are interesting:
- “There is this battle going on now between the pricing-in of this reflation trade and on the other hand the central banks just wanting to temper the pace of the optimism,” said Jane Foley, head of FX strategy at Rabobank. “We’ve got this period of struggle between the bond markets and the other central banks trying to keep optimism from getting too significant – and in that period what we might see is the dollar being a little bit more resilient than the consensus has been expecting.”
- “Yes, real yields will be higher, but then there’s a level of yields which will be consistent with the fact the (growth) outlook is more optimistic. If we stabilize for two or three weeks, the market will decide you can live with it,” said Steve Englander, head of G10 FX research at Standard Chartered. “I’m still pessimistic about the dollar with everything that’s going on. What gives me confidence in my outlook is: there’s no piano which dropped out of a window that landed on the sidewalk, and they’re looking at it and saying – wow! Nobody will ever be able to fix it.”