Robert Carnell, Chief Economist and Head of Research, Asia-Pacific, based in Singapore at ING Bank explained that choosing amongst the other major currencies these days is a bit like choosing which roadkill to consume for dinner.
“Sterling? Well, to many, that will obviously be off the menu. Forget the comforting words from PM May and President Macron overnight, this looks toxic unless a miraculous deal is produced, and even then, the UK Parliament may vote it down. The only thing that maybe makes this look worth a bite, is the grassy-knoll theory that this negotiation is being taken right to the line, to make an unpalatable meal seem less hideous. That’s not something I want on my plate.
The EUR, by association, is also looking rather gnarly. Don’t forget, what’s bad for the UK is bad for Europe, just less so. It is notable that during all the recent market unease in the US, the EUR has failed to do much more than make it back into the range it had inhabited for much of the year, reversing the more recent USD rally. The Italian deficit saga can’t be helping. And perhaps this is why EURGBP doesn’t look better than it does. If you want to give yourself a headache, here is the EU Parliament’s overview of the Stability and Growth Pact rules. No, I barely understand it either.
In the end, that only leaves the JPY. Recent growth figures have been impressive, even the inflation figures, ignoring what is driving them, seem closer to their target than in a very long time. There is renewed chatter about BoJ normalization, and this is not being discouraged by BoJ Governor Kuroda. While this lasts, the JPY should do well.”