US Intervention Brings Asia FX Closer Together

The US-Japan intervention has removed the divergence between the yen and other Asian currencies against the greenback, raising questions about the potential for broader Asia FX outperformance.

The Australian dollar (AUD), long considered a proxy for emerging Asia, may underperform as investors redeploy capital into regional markets.

Falling energy prices and hopes of a lasting peace deal in the Middle East provide additional tailwinds for many Asian manufacturing economies.

However, the US economy remains the deciding factor, with the dollar's appreciation driven by economic exceptionalism. A moderation in this trend may be necessary for Asia FX to outperform on a sustained basis.