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Will Asia FX rebound continue in the face of EU & US trade risks?
- Asian currencies have staged a staged a strong rebound since early in July. The best performers have been the JPY, MYR, THB & IDR.
- Market expectations for aggressive Fed rate cuts & the scaling back of US-China trade risks have provided important triggers for a squeeze of short positions built up in Asian currencies.
- We expect Asian currencies tor remain volatile in coming months ahead of the FOMC meeting in September, US election & EU-China trade talks deadline in November.
