Insights

A renewed wave of yen weakness swept through the FX market in June, with the Japanese currency sinking to multi-year lows against the euro and British pound. It was a story of widening rate differentials as the Bank of Japan refused to scale back its massive stimulus program, whereas the European Central Bank and the Bank of England confirmed that more tightening is in the pipeline.

Meanwhile, the US dollar lost some ground despite a serious recalibration of the Fed’s rate path higher. Traders pushed out the timing of any rate cuts to the second half of 2024, yet the dollar couldn’t capitalize because of the strength in the euro and pound. Gold prices drifted lower too, pressured by a lack of safe haven demand amid the euphoria in equity markets, and the steady grind higher in real yields.

The Fund suffered small losses during June, unable to hold on to the gains it acquired on the more volatile days. Ranging market conditions eventually took a hit on the strategy which was not able to capitalise in the absence of directional volatility.