00:00I think more rate cuts being priced in by the Fed really point to more risk, more positive outlook on risk asset side of things.
00:06And of course, we're heading into December where the center rally comes into play as well.
00:10And of course, all of this really does indicate that the dollars rally for the last two months is coming to an end.
00:17And we continue to expect the dollar to now start to weaken from here.
00:21And, you know, when you look deeper into the U.S. economic momentum, we do have lagging data coming through slowly post a shutdown.
00:28But, you know, as you mentioned, the Beige Book suggests that it's almost looking like a K-shaped recovery.
00:33It's the lower income households that are being impacted.
00:37Job site looking like less hiring, but less firing as well.
00:40More firing and less hiring. So things like that are playing through.
00:45Yeah. And Mishimi, let me just ask you how you read the impact of all of this on the USD.
00:51In the past, I believe we've spoken about your bearish views on the dollar.
00:55How do you see things now, especially with some stabilization and risk sentiments, with this risk on mood in the environment right now?
01:03I think FX markets are a little bit forward looking.
01:06So in anticipation of those Fed cuts, we are seeing those that rally come into play.
01:10But, you know, I think the Fed cutting is only one piece of the overall dollar weakness equation.
01:16I think there's a lot more that's happening on the U.S. front as well.
01:20Of course, we will be seeing shifts in the Fed, the FMC board, with possibly a new member or new chair announced soon.
01:28And, you know, likely, again, the names that are coming through are likely more dovish in nature.
01:33So it could be that overall the board is tinging to a more dovish board.
01:38I think that will weigh on the dollar.
01:40And then at the same time, of course, when we look at the U.S. economy as compared to the other economies around, you know, we have Europe huge on the fiscal agenda.
01:49Yes, it will take time.
01:51You're not going to see results overnight.
01:52But we are quite optimistic, the euro.
01:54And, for example, that's really been the anti-dollar proxy for most part this year.
02:00I'll get there in a second.
02:01There's one thing that caught my attention from the Fed page book yesterday.
02:04This line, every region saw price increases, with 10 of the 12 reporting moderate or modest inflation and two seeing strong input price growth.
02:15Do you think perhaps one of the underpriced risks for 2026 is sticky inflation and the resurgence of inflation?
02:23I think so.
02:23I think that is one point to note.
02:25But I think, you know, again, when we look at the Fed and their mandate, it's, you know, again, trying to find balance between rising inflation or the unemployment rate, you know, moving higher.
02:36And I think near term, it really does feel like the labor market is kind of front and center in terms of how the Fed is thinking.
02:43And, you know, with the prices side of things, I think, you know, different speakers have already come up to say that we have to wait to see, especially the impact of tariffs feeding through, whether they'll be transitionary or permanent.
02:58Yeah.
02:59OK, let's switch over to Europe.
03:00You said one of your strongest calls has been the euro.
03:04Where do you see things going from here?
03:06Because the ECB have essentially signaled that they're going to be standing pat on interest rates.
03:10Do you think the next driver is going to be the respective, you know, stances, monetary policy stances of ECB setting hold and the Fed getting more active with their own rate cutting cycle to push euro higher?
03:24A hundred percent.
03:25I think the rate differential is one thing.
03:27And, of course, the big fiscal agenda, which was announced earlier this year, you know, it's coming through.
03:33And I think it will take next one to two years to see that uplift.
03:36But, you know, for Europe, they're starting off a very low base in terms of GDP improvement.
03:40And I think that will likely play into the European currencies and will likely play out for the upside.
03:49At the same time, also, you know, thinking about that, that central bank divergence, you know, we are seeing, again, very aggressive easing price into next year.
03:58But when we look at the ECB and, in fact, some other central banks as well, we're starting to see pockets of, you know, hikes being priced in the end of 2026, early 2027.
04:07And, you know, that's going to be better, you know, again, be positive, the other currencies versus the U.S.
04:13Yeah.
04:15Majameen, I need to ask you about the pounds and the price action we're seeing there.
04:19It's up a full point in the last 24 hours, up about a seventh of a percent versus the USD.
04:24Do you think the chancellor has done enough here to satisfy some of the concerns that at least financial market participants had about the budget?
04:32You could argue that going into the budget, I think maybe too much negativity was priced in.
04:40And basically, you know, the announcement now was kind of a 50-50, obviously, with the income tax increases only coming much later.
04:50And, you know, giving a little bit of a fiscal impulse to households in terms of the cost of living subsidies right away.
04:56And I think the overall, I mean, just looking at the price action, it really looks like it was kind of, you know, implemented to manage the bond market, at least stability.
05:06Of course, we have seen, you know, 2022 was not too long ago where we saw the volatility in the gilts market.
05:12And I think in order to maintain that stability, this is how they decided to roll it out.
05:17But, of course, how it plays out over the next few years, it's yet to see.
05:23Do you think this budget is going to have any knock-on effects on the Bank of England's own decision-making in 2026?
05:31A hundred percent.
05:32You know, this budget is definitely a disincreationary budget, which makes it easier for the Bank of England now to go ahead.
05:39You know, we have seen them sitting on the edge, especially in the past few meetings, with a mix of hawks and doves on the board.
05:46But I think with this budget coming through, they'll be a little bit more convinced to move the needle, especially because, you know, growth looks pretty soft in the UK.
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