Asian FX Talking: More bad news
Despite the much more aggressive responses by monetary and fiscal authorities recently, it seems that the short term has merely dispelled the denial felt by markets over Covid-19.
Executive summary
In putting together these latest forecasts, we are aware of a number of areas where we lack sufficient foresight for educated guesswork – otherwise known as forecasting.
First and foremost, no one, not even the experts, seems comfortable predicting the path of the Covid-19 Pandemic. Here, we think that for much of Europe and the US, the progression of the disease is still in the foothills and will get considerably worse. It isn’t easy to generalise for the whole of Asia, but there have been some promising developments in China and South Korea in terms of containment, which might hint at a “first in, first out” view.
Secondly, the market seems to be going through various phases in this crisis. Firstly denial, mixed with misplaced hope despite feeble policy responses. That denial is currently giving way to despair and panic, despite (perhaps because of) the bigger, more coordinated and global fiscal and monetary actions being taken. We are taking a punt that the next phase for the markets is a more stoic one, but equally, it might not.
Good luck and stay safe.
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