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Speaker 1: Let's say good morning to Maja been Samon, head of

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Speaker 1: FX research at a ENDS, and so we've been talking

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Speaker 1: about a couple of main issues, China being one, and

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Speaker 1: then the Fed's aggressive positioning on higher interest rates. I

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Speaker 1: guess the big question for Federal Reserve officials is whether

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Speaker 1: the rise in US pay that we've seen over the

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Speaker 1: past year and a half is a one time thing,

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Speaker 1: in which case it would it would generally ease, or

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Speaker 1: it's some kind of new structure, new feedback loop in

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Speaker 1: which prices and wages drive each other up. And if

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Speaker 1: that's the case, then we're in a heap of trouble.

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Speaker 1: Your thoughts, I totally agree. I think that is the

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Speaker 1: biggest risk into twenty twenty three UM and it's too

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Speaker 1: early to say, but I think into the first quarter

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Speaker 1: of the year, if we continue to see wage growth

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Speaker 1: UM or average ally learning has continued to show that

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Speaker 1: upside move UM, you know, we could be in for

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Speaker 1: a completely structural change and that's going to be very

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Speaker 1: difficult to unwind. And then similarly, it will be very

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Speaker 1: difficult to price in any rate cuts. Even so, you're

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Speaker 1: a head of FICS research, what's you're out like for

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Speaker 1: the outlook for the U S dollar in this environment. Look,

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Speaker 1: we think that um, you know, obviously, over the last

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Speaker 1: two months we have seen a weekly dollar. Um, it's

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Speaker 1: we feel like it's a little bit of a seasonal thing. December.

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Speaker 1: December is weaker for the dollar seasonally. UM, We've had

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Speaker 1: obviously China reopening news and a little bit of that

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Speaker 1: European data, um, you know, looking better than U S data,

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Speaker 1: So maybe that's been helping. But broadly into Q one

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Speaker 1: and Q two next year, we are positioning for a

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Speaker 1: slightly stronger dollar from where it is right now. UM,

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Speaker 1: you know, obviously twenty twenty two was unidirectional, dollar was

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Speaker 1: just the rest of the world. I think we will

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Speaker 1: see a little bit of a differentiation into this year.

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Speaker 1: But still broadly recession risks are not here yet, dollar

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Speaker 1: being defensive, saying even guarrency yielding five ongoing QT will

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Speaker 1: be supportive here. The big question is why is that

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Speaker 1: it just simply that you think that it's it's basically

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Speaker 1: a haven by Yeah, that's one of the key reasons.

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Speaker 1: And I also think that, um, there is also scope

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Speaker 1: for there is a risk for upside. UM Hawker is fed,

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Speaker 1: which means that as we saw power. He came up

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Speaker 1: and he specifically said that you know there, you know,

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Speaker 1: there might be room for upside on your dot plot

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Speaker 1: depending on the data. So if there are any if there,

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Speaker 1: if there's any repricing of terminal rates into Q one UM,

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Speaker 1: that would then obviously of course pushed the U. S

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Speaker 1: Dollar higher as well. Well. The end used to be

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Speaker 1: a haven by but it's had a horrible year, the

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Speaker 1: worst performing gt and currency. Can you see this changing

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Speaker 1: in three, particularly when we get a new governor at

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Speaker 1: the bo J Yes, especially UM three. We like the end,

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Speaker 1: We like the swizzy the end, particularly because I think

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Speaker 1: there are already rumors that there might be a policy

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Speaker 1: review coming up, and a policy review usually turns into

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Speaker 1: a change in stands on monetary policy. I think what's

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Speaker 1: happening in UM with the new change of governor, I

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Speaker 1: think the only thing that rolls be for the supportive

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Speaker 1: is that they're also having UM wage UM resetting UM

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Speaker 1: meeting that's taking place in Q one and if there

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Speaker 1: is a reset of your minimum wages higher, that's going

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Speaker 1: to contribute to that wage UM growth in Japan. And

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Speaker 1: of course we have Japanese CPI out this week. That

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Speaker 1: has been in an accelerating trend for the past months.

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Speaker 1: As it is, is there a currency ex Japan in

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Speaker 1: Asia that looks rock solid to you, um ex Japan

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Speaker 1: and Asia. I think c n Y has already moved

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Speaker 1: um more than it should on the reopening story. UM.

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Speaker 1: But who else would benefit out of this would really

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Speaker 1: be UM. We are talking about China reo, then we

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Speaker 1: are a little bit cautious of the fact that it's

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Speaker 1: you know, as we saw on Friday, there was a

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Speaker 1: China Egnomy conference and they were really focusing on your

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Speaker 1: domestic consumption and services recovery rather than your industrial out

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Speaker 1: in a production and fiscal stimulus and those sort of things.

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Speaker 1: And so if we look into the next six months

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Speaker 1: or beyond and see you know, domestic driven recovery, that's

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Speaker 1: probably gonna probably benefit the thigh um part just from

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Speaker 1: the outgoing tourism. But again it seems like that's probably

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Speaker 1: a second half three story. I think there's going to

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Speaker 1: be with the COVID cases is going to get worse

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Speaker 1: before it gets better. We have a typically a revival

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Speaker 1: in China would mean strengthening commodities. We've got an interesting

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Speaker 1: story out of Australia today the coal is going to

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Speaker 1: overtake iron or thanks to the energy crisis. So what

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Speaker 1: are your thoughts around this and your outlook for commodities currencies.

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Speaker 1: So that's a great question because um, with China, you know,

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Speaker 1: we were just looking at it today. Um, you know,

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Speaker 1: when we look at the Aussie the Kiwi which tends

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Speaker 1: to be beneficiaries of China. Now Australia benefits with you know,

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Speaker 1: I know and call exports, but New Zealand benefits from dairy.

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Speaker 1: So if we are actually talking about domestic consumption reviving,

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Speaker 1: then I think that the New Zealand exports may fare

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Speaker 1: slightly better than the Aussi exports in the near term. Um.

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Speaker 1: Having said that, obviously, moving forward, I guess depending on

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Speaker 1: the growth outlook on China from the you know, based

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Speaker 1: on the basis of the investment side of things, that's

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Speaker 1: probably a longer term story which should be bullish the Aussie.

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Speaker 1: Excellent stuff, Thanks very much, Marja bean Zaman, head of

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Speaker 1: FX Research at a n ZAID