TORONTO, May 30, 2013 /CNW/ - The U.S. Federal Reserve System (the Fed)
may soon start backing away from bond buying, which is likely to shift
the course of foreign exchange (FX) markets according to a Scotiabank's
FX Outlook report released today.
"Low inflationary pressures and disappointing growth in the world's
largest countries laid the foundation for loose monetary policy. The
resulting hunt for yield drove emerging market FX appreciation but this
is beginning to abate as a strong USD has shifted near-term risks to
capital outflows," said Pablo Breard, Vice President, International
"The unwinding of global liquidity may trigger temporary financial
market volatility (as we observed in these past weeks) but will not
neutralize the long-term economic benefits of structural changes
implemented by relevant emerging-market countries in Latin America and
Asia/Pacific", he adds.
"A broadly stronger USD leaves CAD vulnerable to near-term weakness, but
there is a lot of bad news priced into CAD, which should contain the
currency within a 0.95 to parity range over the medium-term," suggest
Camilla Sutton, Scotiabank's Chief Currency Strategist.
Meanwhile, the EUR, JPY and GBP are expected to weaken against the USD
into year-end mainly on relative shifts in central bank policy and
growth outlooks, according to the FX Outlook. Several other currencies,
including CAD, MXN, THB and CHF are expected to be somewhat range
bound; while AUD, NZD, NOK, PEN and KRW will appreciate.
The Foreign Exchange Outlook is a joint publication between Scotiabank
Global Economics and FX Strategy. The monthly report includes: global
FX forecasts, covering 33 currencies in the advanced economies, Latin
America and emerging Asia; as well as a fundamental commentary on most
major markets; consensus forecasts and charts; and a broad overview of
major FX drivers.
Please read the full report below at http://www.scotiabank.com/ca/en/0,,3112,00.html.
Scotiabank provides clients with in-depth commentary on the factors
shaping the outlook for Canada and the global economy, including
macroeconomic developments, currency and capital market trends,
commodity and industry performance, as well as monetary, fiscal and
public policy issues.
Scotiabank is a leading multinational financial services provider and
Canada's most international bank. With more than 83,000 employees,
Scotiabank and its affiliates serve some 19 million customers in more
than 55 countries around the world. Scotiabank offers a broad range of
products and services including personal, commercial, corporate and
investment banking. In December 2012, Scotiabank became the first
Canadian bank to be named Global Bank of the Year and Bank of the Year
in the Americas by The Banker magazine, a Financial Times publication. With assets of $754 billion (as at April 30, 2013),
Scotiabank trades on the Toronto (BNS) and New York Exchanges (BNS).
For more information please visit www.scotiabank.com.
For further information:
Pablo Breard, Scotiabank Global Economics, (416) 862-3876, firstname.lastname@example.org;
Camilla Sutton, Scotiabank Global Banking and Markets, (416) 866-5470, email@example.com; or
Joe Konecny, Scotiabank Media Communications, (416) 933-1795, firstname.lastname@example.org.
For more Scotiabank economic publications visit