The US dollar has been a topic of detailed discussion at Neuberger Berman.
Longer term, we believe the dollar is close to fair value, if not slightly overvalued, and on a downward trend. That view is supported by the exchange rates implied by purchasing power parity and the negative sentiment associated with the US’ twin deficits, caused by an aggressive fiscal expansion that will demand foreign financing.
Nonetheless, we have a cautiously positive near-term dollar outlook. This reflects the view that the long-term bearish dynamics described above, in combination with changes to central bank balance sheets and perceived US political risk, have pushed the currency too low already.
The dollar also enjoys support from US interest rate divergence with the rest of the world. Dollar selling, both speculative and related to unhedged flows into European equity markets and hedged flows from European and Japanese investors into US fixed income, has persisted despite the fact that interest rate differentials have widened dramatically in favour of the US currency, up to around 3 per cent per year.
When an investor hedges the foreign-currency exposure of a non-domestic asset, it effectively sells the foreign currency to buy its domestic currency. Current interest rate differentials mean that a euro or yen-based investor hedging US dollar exposure is selling a currency that earns around 3 per cent per year more than the currency it is buying.
Over recent years, many investors have looked to international markets in their search for higher fixed income yields. The US, where interest rates have been rising before those of many other major developed economies, has been one of the more obvious places to go. Those investors will usually hedge the foreign-currency exposure from fixed income assets, but they rarely take the costs of hedging into account when they are comparing yields because in most cases the difference it makes is small.
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Read more:
Is global investors' laissez-faire attitude to US debt justified?
US economy slows in Q1 as consumer spending slows
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It does seem likely that euro and Japanese yen-based investors will begin to question holding currency-hedged US assets now that hedging costs have reached 3 per cent per year, however. By the same token, US dollar-based investors will eventually notice that they can earn 3 per cent per year simply by hedging the euro exposure they get through their European assets back to dollars. Moreover, we expect that 3 per cent, known as the “carry” between the two currencies, to rise as we see further divergence in monetary policies.
The incentive to reverse recent flows out of the dollar are building, therefore. Signs of growing demand for US dollars have been appearing - the recent rise in the US dollar overnight index swap rate is one example.
At the same time, we think the euro is overvalued, on a short-term view: it is making financial conditions in the euro zone too tight and does not reflect the fact that European inflation remains subdued, that Purchasing Managers Indexes and other economic data have moderated over recent months, or that the region’s political risk remains elevated.
Because our strong-dollar view applies only to the short term, within a longer-term downward trend, Neuberger Berman’s asset allocation committee (AAC) maintains its cautiously positive view on assets that have been sensitive to a strengthening dollar in the past, such as emerging market bonds, currencies and equities. As well as acknowledging that global investors are still under-exposed to emerging markets and that they are much earlier into their recovery than the developed markets, the AAC regards the long-term downtrend in the dollar as a net-positive for the emerging world.
Recent signs of a comeback for the greenback probably should not give reassurance to long-term dollar bulls, in our view. There are technical reasons for a reversal of the downward trend that has been in place since the start of 2017 - but they are likely to prove temporary.
This rally may offer some more attractive levels at which to establish dollar shorts or underweights.
Ugo Lancioni is global head of currency at Neuberger Berman, which is a member of The Gulf Bond and Sukuk Association.
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RACE CARD
6.30pm: Handicap (TB) $68,000 (Dirt) 1,600m
7.05pm: Meydan Sprint – Group 2 (TB) $163,000 (Turf) 1,000m
7.40pm: Curlin Stakes – Listed Handicap (TB) $88,000 (D) 2,200m
8.15pm: UAE Oaks – Group 3 (TB) $125,000 (D) 1,900m
8.50pm: Zabeel Mile – Group 2 (TB) $163,000 (T) 1,600m
9.25pm: Balanchine – Group 2 (TB) $163,000 (T) 1,800m
10pm: Al Shindagha Sprint – Group 3 (TB) $130,000 (D) 1,200m
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Results
2.30pm: Expo 2020 Dubai – Conditions (PA) Dh80,000 (Dirt) 1,600m; Winner: Barakka, Ray Dawson (jockey), Ahmad bin Harmash (trainer)
3.05pm: Now Or Never – Maiden (TB) Dh82,500 (Turf) 1,600m; Winner: One Idea, Andrea Atzeni, Doug Watson
3.40pm: This Is Our Time – Handicap (TB) Dh82,500 (D) 1,600m; Winner: Perfect Balance, Tadhg O’Shea, Bhupat Seemar
4.15pm: Visit Expo 2020 – Handicap (TB) Dh87,500 (T) 1,600m; Winner: Kaheall, Richard Mullen, Salem bin Ghadayer
4.50pm: The World In One Place – Handicap (TB) Dh95,000 (T) 1.900m; Winner: Castlebar, Adrie de Vries, Helal Al Alawi
5.25pm: Vision – Handicap (TB) Dh95,000 (D) 1,200m; Winner: Shanty Star, Richard Mullen, Rashed Bouresly
6pm: Al Wasl Plaza – Handicap (TB) Dh95,000 (T) 1,200m; Winner: Jadwal, Dane O’Neill, Doug Watson
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
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COMPANY PROFILE
Name: Rain Management
Year started: 2017
Based: Bahrain
Employees: 100-120
Amount raised: $2.5m from BitMex Ventures and Blockwater. Another $6m raised from MEVP, Coinbase, Vision Ventures, CMT, Jimco and DIFC Fintech Fund
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Scores
Scotland 54-17 Fiji
England 15-16 New Zealand
RACECARD
4.30pm Jebel Jais – Maiden (PA) Dh60,000 (Turf) 1,000m
5pm: Jabel Faya – Maiden (PA) Dh60,000 (T) 1,000m
5.30pm: Al Wathba Stallions Cup – Handicap (PA) Dh70,000 (T) 2,200m
6pm: The President’s Cup Prep – Conditions (PA) Dh100,000 (T) 2,200m
6.30pm: Abu Dhabi Equestrian Club – Prestige (PA) Dh125,000 (T) 1,600m
7pm: Al Ruwais – Group 3 (PA) Dh300,000 (T) 1,200m
7.30pm: Jebel Hafeet – Maiden (TB) Dh80,000 (T) 1,400m
More from Neighbourhood Watch:
Results
Final: Iran beat Spain 6-3.
Play-off 3rd: UAE beat Russia 2-1 (in extra time).
Play-off 5th: Japan beat Egypt 7-2.
Play-off 7th: Italy beat Mexico 3-2.
What is double taxation?
- Americans living abroad file taxes with the Internal Revenue Service, which can cost hundreds of dollars to complete even though about 60 per cent do not owe taxes, according to the Taxpayer Advocate Service
- Those obligations apply to millions of Americans residing overseas – estimates range from 3.9 million to 5.5 million – including so-called "accidental Americans" who are unaware they hold dual citizenship
- The double taxation policy has been a contentious issue for decades, with many overseas Americans feeling that it punishes them for pursuing opportunities abroad
- Unlike most countries, the US follows a citizenship-based taxation system, meaning that Americans must file taxes annually, even if they do not earn any income in the US.
The specs
Engine: 3.8-litre V6
Power: 295hp at 6,000rpm
Torque: 355Nm at 5,200rpm
Transmission: 8-speed auto
Fuel consumption: 10.7L/100km
Price: Dh179,999-plus
On sale: now
UAE currency: the story behind the money in your pockets
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City's slump
L - Juventus, 2-0
D - C Palace, 2-2
W - N Forest, 3-0
L - Liverpool, 2-0
D - Feyenoord, 3-3
L - Tottenham, 4-0
L - Brighton, 2-1
L - Sporting, 4-1
L - Bournemouth, 2-1
L - Tottenham, 2-1
Oscars in the UAE
The 90th Academy Awards will be aired in the UAE from 3.30am on Monday, March 5 on OSN, with the ceremony starting at 5am
THREE
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How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
Company%20Profile
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If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Killing of Qassem Suleimani
Managing the separation process
- Choose your nursery carefully in the first place
- Relax – and hopefully your child will follow suit
- Inform the staff in advance of your child’s likes and dislikes.
- If you need some extra time to talk to the teachers, make an appointment a few days in advance, rather than attempting to chat on your child’s first day
- The longer you stay, the more upset your child will become. As difficult as it is, walk away. Say a proper goodbye and reassure your child that you will be back
- Be patient. Your child might love it one day and hate it the next
- Stick at it. Don’t give up after the first day or week. It takes time for children to settle into a new routine.And, finally, don’t feel guilty.
How Sputnik V works
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TO A LAND UNKNOWN
Director: Mahdi Fleifel
Starring: Mahmoud Bakri, Aram Sabbah, Mohammad Alsurafa
Rating: 4.5/5
