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Forex pairs in this Article » EUR/USD, GBP/USD (Barcelona) - There is no longer a single paradigm that explains the behaviour of all FX, notes HSBC Global Research Team, instead they classify current market conditions on three broad groupings or buckets of FX behaviour.

Key Quotes

"The mistake has been to look for a single model that can be applied across the board. It simply does not exist anymore. Instead, the global currency market is made of three broad groupings, somewhat interlinked, but with distinct behaviours and drivers."

"A. The carry candidates: predominantly G10 currencies, the key consideration here is the outlook for the economy and associated implication for relative interest rates. Here your FX strategist is basically your economist."

"B. The diminished safe havens: the CHF and the JPY are no longer exclusively driven by the global consideration of RORO. The JPY, in particular, is trading more as a local than a global currency."

"C. The balance of payments club: largely but not exclusively emerging market FX, where the current account balance and the outlook for capital account financing are the key FX drivers. This is back to old school FX analysis."
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