💱Low Yielders Outperformance May Be Due to Foreign Flows: Cable FX Macro

• Currency watching can be puzzling over the last month as low yielders gain ground and the dollar posts heavy losses. The USD currently holds the highest deposit rate in the G10 and shorting it vs low yielders is not an attractive proposal

• Over the last month, the yen leads all G10 currencies except the kiwi and the franc has traded stronger vs half of the group, USD/CHF has dipped 4.6%

• One reason behind the move could be a front-running of repatriation flows. Low yielding domestic investors have parked their money in dollar denominated paper as it offered both safety and yield. While it remains safe, the yield is expected to erode in the coming months as the Fed eases rates. Domestic investors would be expected to take their money back home