Risk of Pushing Tapering Too Far Out: Stretch

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Oct. 22 (Bloomberg) -- Jeremy Stretch, Exec Director and Head of FX Strategy at 3) Canadian Imperial Bank of Comm, discusses worldwide monetary policy and his subsequent FX investing strategy. He speaks on Bloomberg Television’s “On The Move.” (Source: Bloomberg)

Summer markets went into september absolute confidence will see tapering.

Subsequently, the markets were completely wrong.

Now we are running the risk of doing the reverse.

We are pushing tapering out beyond ben bernanke and two janet yellen's 10 year.

The problem is we are pushing too far.

If you get a payroll report that is probably in the line with consensus, that will rein in some of the expectations.

Are real overly short and our core dollar?

We probably are.

A lot of people use the approximate and that's another factor which we are struggling without.

Clearly as we went to the end of the third quarter we were seeing the markets moving aggressively against the dollar.

That trend is continuing over the past couple of weeks.

When you look at places like australia for example.

That leaves is exposed to the risks of pulling back.

Let's talk a little bit because you're the fed possibly on hold.

You have kuroda saying we will add more stimulus.

How does that play out for the dollar/yen?

Is it not the dollar/yen?

It probably is not the dollar/yen.

It is probably relatively large.

There is still some modest uptick.

That is of the next three-six months.

Not in a financial rise.

Probably 102 as an extreme.

Not a big move.

They issue as far as japan is concerned, structural reforms seems to be on the launchpad.

There are still strong vested interest in abe's own party.

Then it goes back to america.

Will run into -- we might see more stimulus being highlighted.

The consumption tax hike next year.

To a certain extent, that is price tag.

Probably it is.

The diminishing returns suggest that if they pumped a greater liquidity it will be difficult to see it move appreciably.

At the same time, your bird to the aussie/dollar that you referred to the aussie/dollar.

The bank of australia as i see it on more easing.

You are saying the bank of japan trumps the bank of australia.

I do not think it does.

That will be the interesting just the position.

Clearly, the crosses it very interesting.

-- that will be the interesting juxtaposition.

Especially the post-shutdown period.

Not to the highest risk appetites is the beginning of the year.

That would imply the australian dollar that is good news.

There's still a case to be made that they have not done easing.

When you mentioned the story this morning, is encouraging for the australian story and may suggest the rolling over of mining sector.

Not as strong as we see it.

Nevertheless, there are -- from the rba.

That'll be an interesting point as for the aussie dollar.

It was needed to 97.25 which is 50% retracement, that will provide a good opportunity to face the move again.

Your outlook for gdp any u.k. gdp will be near one percent to quarterly basis.

Excellent.

Jeremy, thank you stop jeremy stretch.

Coming up, trouble for michael o'leary.

He is taken to twitter like no

This text has been automatically generated. It may not be 100% accurate.

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