Deutsche, JPMorgan Favor Energy-Linked Currencies Amid Iran War
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jbx]]tehh(gmqba6y7u5exb9_media_dl_1.png BloombergArticle content(Bloomberg) — Investors are doubling down on bets that energy-linked currencies will keep rising as the US-Iran conflict reshapes global oil markets, with Deutsche Bank, JPMorgan Chase & Co. and Pioneer Investments urging clients to buy into the trade.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentStrategists from JPMorgan and Deutsche recommend the Norwegian krone and Australian dollar, which got a boost Monday after Brent futures rose above $108 a barrel, as efforts to resume peace talks stalled. The currencies are becoming more attractive as proceeds from energy sales boost the economies and allow for tighter monetary policy — markets are penciling in interest-rate hikes this year in both countries.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentThe krone and Aussie have gained about 2.5% and 1%, respectively, since the conflict began, making them the best performers in the Group of 10. JPMorgan also favors long krone positions against the Swiss franc and Japanese yen.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentAt Pioneer, strategist Paresh Upadhyaya is targeting higher-yielding currencies in energy-rich economies, including Kazakhstan, Brazil and Nigeria, against a basket of comprising the euro and dollar.Article content“We want to be in high-yielding places that are energy sufficient,” Upadhyaya said.Article contentThe recommendations show how traders are adjusting to a broader shift in currency markets: As oil prices surge and supply risks rise, investors are favoring exporters that benefit from stronger terms of trade, while avoiding importers exposed to rising energy costs.Article content“The most compelling opportunities lie within commodity-linked currencies,” said Federico Cesarini of Amundi Investment Institute. He said the Australian and Canadian dollars, Norwegian krone and Swedish krona are “deeply undervalued.”Article contentUpadhyaya said he is cautious with currencies from Asian energy importers, which have come under pressure as oil prices have climbed as tensions around the Strait of Hormuz persist.Article contentThe euro has fallen about 0.5% since the conflict began, underscoring Europe’s reliance on imported energy. The Indonesian rupiah lost 2.5% while the Indian rupee declined 3.4% against the dollar over the period.Article contentOn the flip side, in Kazakhstan — which exports oil and gas — the tenge has been the top performer, rising some 10%.Article contentHedge funds, meanwhile, have also added to bullish bets on that currency, according to Commodity Futures Trading Commission data through the week of April 21, while expectations for further rate hikes in commodity-exporting economy are adding support. Article contentTrending Posthaste: Deficits are climbing across Canada, but this province is awash in red ink News Carney launches $25-billion sovereign wealth fund that will allow Canadians to share in profits Economy Subscriber only. How a collapsing rental market is costing some homeowners more than they bargained for Subscriber only Real Estate Real Brokerage to buy Re/Max in widening industry consolidation Real Estate Energy giant Shell to buy Canada's ARC Resources for $22 billion Oil & Gas Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. Posthaste: Deficits are climbing across Canada, but this province is awash in red ink News Carney launches $25-billion sovereign wealth fund that will allow Canadians to share in profits Economy Subscriber only. How a collapsing rental market is costing some homeowners more than they bargained for Subscriber only Real Estate Real Brokerage to buy Re/Max in widening industry consolidation Real Estate Energy giant Shell to buy Canada's ARC Resources for $22 billion Oil & Gas