Merrill's defensive play proves profitable
High levels of volatility and declining global growth, and the accompanying higher levels of risk aversion, would see the market turn to "defensive" currencies such as the yen and the Swiss franc, said Emma Lawson, G-10 currency strategist at the bank in London. "The risk-adjusted returns are much more in their favour," she said.
This environment would see support for carry trades decline, taking the pressure off yen and triggering vulnerability in the Australian and New Zealand dollars.
Merrill
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