Forex Flash: Dips in Asian currencies well supported – Westpac

“From a fundamental and flow perspective though, we would still argue that dips in Asian currencies should be well supported. Asia remains an outperformer by a comfortable margin and while the index is elevated it remains below previous highs above the 70% level.” suggests the Westpac Research Team.

The data flow out of developed markets, particularly in terms of Europe and the US, has become more patchy in recent weeks. There is of course a risk that some of this weakness spills over into Asia but at this stage it seems we would need to see quite a deterioration to generate renewed fears surrounding the global economic outlook. According to the team, “If anything, a modest deterioration in data momentum out of Europe and the US may reaffirm Asia in a positive light from a relative growth and capital flow perspective.”