The 'Big Short': Commodity FX - Morgan Stanley
This observation is consistent with global growth differentials offered
suggesting that the riskier EM/commodity currency segment does not offer
sufficient returns to keep capital locally deployed.
Capital leaves the area and with the US being EM’s biggest creditor, this capital will flow back into the USD. In this respect we remain bearish the Asian and FX commodity block.
Today the AUD is most at risk breaking lower as markets re-pricethechance of the RBA cutting rates in June or July reacting to disappointing wages.