Intouch Capital Markets: Short-Term USD Strengthening

The video discusses the reaction of the dollar to recent CPI reports, suggesting that the reaction function may not have changed significantly. It explores the divergence in currency markets due to varying policy trajectories and highlights the impact of central bank dynamics on currency sensitivity. The discussion also covers the effects of pandemic variants and vaccination progress on FX markets, particularly in Australia and New Zealand. Finally, it examines market expectations for the RBNZ's upcoming decisions and potential investor reactions.

What is the main reason for the exaggerated movement of the dollar according to the first section?

• A new monetary policy announcement

• A decisive change in CPI data

• Long-term investors unwinding dollar shorts

• A shift in the broader trend

Which currencies are expected to underperform due to accommodative policies?

• US Dollar and British Pound

• Australian Dollar and Canadian Dollar

• Euro and Japanese Yen

• Swiss Franc and Chinese Yuan

How does the Fed's hawkish turn affect currency sensitivity?

• It makes currencies less sensitive

• It has no effect on currencies

• It decreases volatility

• It increases currency sensitivity

What is a key factor in supporting the Australian Dollar post-lockdowns?

• Lower interest rates

• Rising commodity prices

• Progress in vaccination trends

• Increased government spending

What is the expected outcome if the RBNZ does not provide explicit forward guidance?

• No change in Kiwi value

• A decrease in investor interest

• Short-term disappointment in Kiwi

• A significant rise in Kiwi