When it comes to currency, GSAM is positioned for the US dollar to strengthen versus G10 currencies and a basket of Asian currencies he considers vulnerable to a slowdown in Chinese growth, according to the head of fixed income.
‘Currency volatility over the week was centred on the offshore renminbi, which appreciated 2.6% versus the US dollar over a two-day period. The currency rebounded from the lowest level since its launch seven years ago to its strongest level since November 2016.’
Furthermore, a combination of tighter controls on capital leaving China, limited liquidity and seasonal factors are thought to have been behind the sharp move, according to Moffitt. ‘The rise checked the pace of the US dollar’s recent ascent versus currencies such as the Japanese yen,’ he said.
‘The US dollar resumed its upward trajectory versus G10 currencies on Friday, following the release of positive US economic data, which included the employment report and ISM manufacturing index reading, which rose to a two-year high.’
‘We continue to be positioned for US dollar strength, in particular versus a basket of Asian currencies that we think are vulnerable to a slowdown in Chinese growth.’