Trends Watch: Currencies

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks with John Floyd, Director, Research & Strategy, Record Currency Management, Inc.

What is your outlook for currency trading/investing?

Given the relatively benign FX volatility environment over the past few years, currency markets have not received the same attention as other markets such as equities, fixed income, and private equity.

However, there is an increasing probability that currencies will become a greater area of focus as both macro-economic and geopolitical developments become catalysts to an increase in volatility and adjustments in worldwide exchange rates. As such, I think currency markets will feature in a more significant way as an equilibrating mechanism to help correct global macroeconomic balances.

What is your outlook for the economy?

Global economies and financial markets have clearly had a dramatic and long-lived expansion following the Great Recession of 2008. However, often unnoticed is the fact that in many large economies growth has not reached full potential and inflation remains below target levels despite record low levels of unemployment. Given the potential limits of monetary policy in this scenario, the economic end game will likely involve some sort of debt write downs and adjustments in currency markets.

What keeps you up at night?

The worldwide rise in xenophobia and sharp divisions across both economic and political spectrums is in sharp contrast to asset markets being at or near records within an extended economic growth cycle. While I am excited about the opportunities for investment prospectively I am deeply worried about the path to resolving massive global economic and geopolitical imbalances.

However, I recently read a great book on sleep by Mathew Walker called Why We Sleep that perhaps can help me rest easier at night!