外汇观点：美元能跌多少？

US dollar: How low can it go? There is space for the yen to appreciate further and realignwith fundamentals. Near term this could still boost thedollar's risk premium, which is large but not extreme.Medium term, this is a yen, not a dollar, policy. An expensiveEUR should underperform under-allocated EM FX. FX Research Themistoklis Fiotakis(i)+44 (0) 20 7773 2002themos.fiotakis@barclays.comBarclays, UK LefterisFarmakis(i)+44 (0) 20 3555 6549lefteris.farmakis@barclays.comBarclays, UK •Room to go. FX moves both in the yen and the broad dollar are very sharp – as large or largerthan you would expect in the wake of actual yen intervention. But this is no reason to fadethem yet. The yen can still drop to the high 140s to realign with cross-asset model gauges.And while the EUR is trading above fair value and ratedifferentials,the dollar's risk premium(while large) is not extreme by historical standards.• Shinichiro Kadota(i)+81 3 4530 1374shinichiro.kadota2@barclays.comBSJL, Japan What can the US administration do? The ESF allows for sizable symbolic intervention in FXmarkets. Positions above $20bn, however, would require either a largerre-shufflein ESF assetcomposition or congressional approval.• Lhamsuren Sharavdemberel(i)+81 3 4530 1881lhamsuren.sharavdemberel@barclays.comBSJL, Japan Speed limits for EUR…When the dust settles, speed limits for key G10 currencies includingthe EUR may emerge. Our dollar sentiment index indicatorshiftedfrom very long toextremely short, indicating a build-up of speculative positioning. The US economy is growingstrongly in contrast to dovish Fed pricing. The EUR is expensive intariff-adjustedterms. This isa yen (and maybe a KRW) policy but not a broad dollar policyshift.And in the past, China hasleaned against speculative rallies – and without China’s participation, a dollarsell-offcannotbroaden sustainably, as we argued yesterday, too.• Erick Martinez(i)+1 212 526 9380erick.martinez@barclays.comBCI, US ….less so for EM FX. By contrast, these developments pave the way for a sustainable EM rally(despite worries for an unwind in carry trades). EM local assets have gone through a decade ofunder-allocation relative to historic trends, and post-"Liberation Day" flow dynamics showearly signs of a catch-up in EM allocations. Public PolicyMichael McLean(v)+1 212 526 9393michael.mclean@barclays.comBCI, US Thisdocument is intended for institutional investors and is not subject to all of theindependence and disclosure standards applicable to debt research reports prepared for retailinvestors under U.S. FINRA Rule 2242. Barclays trades the securities covered in this report for itsown account and on a discretionary basis on behalf of certain clients. Such trading interestsmay be contrary to the recommendationsofferedin this report. Barclays Capital Inc. and/or one of itsaffiliatesdoes and seeks to do business with companiescovered in its research reports. As a result, investors should be aware that the firm may have aconflict of interest that couldaffectthe objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision. (i)This author is a debt research analyst in the Fixed Income, Currencies and CommoditiesResearch department and is neither an equity research analyst nor subject to all of theindependence and disclosure standards applicable to analysts who produce debt researchreports under U.S. FINRA Rule 2242. (v)This author is a registered US equity research analyst who is subject to US FINRA Rule 2241and who may write debt research under FINRA Rule 2242. FOR ANALYST CERTIFICATION(S) PLEASE SEE PAGE 6. Quantifying the scope for further dollar weakness The yen has some room to rally below 150 Regardless of whether you were a dollar bull or a dollar bear last Thursday, the events thatensued would have likely caught you by surprise. To begin with, as we discussed in a note yesterday morning, the potential for a joint US-JapanFX intervention triggered a drop in USDJPY that is comparable to the types of moves we observeduring actual intervention events. That by itself would have been enough of a move in any othercircumstance. Yet, the signal that such intervention could be coordinated with the US ispowerful enough to trigger much more outsized and persistent moves. What is more, the starting point was one where the yen was trading with a risk premium tocross-asset gauges. Again, as per yesterday’s note, a regression of USDJPY against yielddifferentials,equity risk premia and flows would have put it below 150, in the high 140s (Figure1). Valuation is a keydifferentiatorversus other major dollar crosses such as the euro. The yen isfundamentally undervalued across macro and cross-asset gauges. By contrast, the EUR is muchmore expensive both on atariff-adjustedfair value basis but also versus ratedifferentials(as wediscuss in more detail below). With the EUR serving as the main anti-dollar, it may be hard for markets