Forex Flash: EUR correlations seen to be positive – Westpac

Asian currencies have not been immune from the resurgent USD trend through the course of this week. Most USD/Asia pairs have traded with a firmer bias, albeit while remaining within recent ranges. The ADXY has now dropped a little over 1% from its mid January peak. There are also signs that Asian currencies are starting to realign themselves with traditional drivers (at least compared with the past few years).

Correlations with global equity markets and EUR are turning more positive, while correlations with JPY are easing. “No doubt this latter move has been aided by a range bound environment in USD/JPY. Our sentiment gauge has rolled over and suggests near term sentiment in Asian currencies is skewed to the downside.” warns the Westpac Research Team.