Merrill benefits from carry prediction
CURRENCY FORECASTS
Steven Englander, head of currency strategy for the G10 at Merrill Lynch in London, said the firm's G3 forecasts have been driven by the expectation that carry trades will unwind, along with a valuation framework that suggests the favourite vehicles for carry are overvalued.
Englander said central banks are pulling back liquidity. This is particularly the case with G10 central banks, whose policy rates are at low levels. "Market expectations of flat Bank of Japan policy rates seem very myopic –
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