Slow growth and tight monetary conditions to push the Dollar higher – Month in Review: June 2023
Macroeconomic Environment Review
The currency movements in the first half of the year were influenced by a mix of factors, including economic fundamentals, policy reactions, and market conditions. The global recovery drove the market in the first quarter, with a strong performance from the Euro area and China, but there was a slowdown in the second quarter. Inflation persisted, leading most central banks to maintain a cautious policy stance, except for the Bank of Japan. Commodity prices experienced volatility, particularly in the oil market, while commodity currencies responded differently based on country-specific factors, such as the impact of housing issues on the New Zealand dollar and Swedish krona. Market risk sentiment generally improved, except for a brief spike during a banking crisis in March, and the VIX, a measure of market volatility, returned to pre-pandemic lows in June. However, the decline of the VIX adversely affected the Japanese yen, leading to carry outflows.
Looking ahead, slowing global growth and increased recession risks are expected to dominate the second half, while central banks are unlikely to change their policies quickly. The combination of slowing growth and tight monetary conditions may expose domestic problems, particularly in countries with vulnerable property sectors like the UK. As a result, there is an expectation that recession concerns will impact risk sentiment and create a more favorable backdrop for the US dollar.
Monthly Performance Review
During the month of June 2023, AENAON Syncro Strategies generated the following total returns net of fees:
Across the spectrum of our benchmark indices, our strategies’ performance during June was positive. As a comparison, the US S&P 500 equities index gained 6.47%, the Barclay Hedge Fund Index posted a 2.28% advance, the Barclay CTA Index added 0.68% while the other benchmark indices can be seen on the chart below.
Further to the above, and as we were notified during the past month, AENAON’s strategies received yet another award from the prestigious BarclayHedge community: AENAON Syncro Equities, our quantitative US Equities model, has ranked number 2 in the Equity Market Neutral category for May 2023, among hundreds of our peers, underlining our robust performance over the past years that continues strong.
Chart 1: Monthly Performance vs. Benchmark Indices – June 2023
Charts 2, 3 and 4: Inception-to-Date Performance vs. Benchmark Indices
You can always review our updated factsheets at the following Fundpeak links, with monthly performance updates and statistics since inception:
