9 January 2014 FX Blueprint: Thin end of the wedge differently. Our view that USD strength will broaden out to GI0 low-yielders like EUR, and continue to gain ground against the JPY is thus an important tailwind for USD/SGD. SGD is also one of the most overvalued currencies globally, with consensus across a broad range of models. Moreover, domestic vulnerabilities have built up in Singapore over the OE years from high household debt to bubbly property prices that leave her exposed to inevitable short-end rates normalization. We are long USD/SGD looking for a move above 1.30 this year. nmri appiec uiturn ;13i,1,.. It, play We expect RMB appreciation to persist in 2014 despite a strong USD environment. With global growth gradually recovering and Asian exports likely to catch up, we look for a healthy current account surplus for China ($220bn, 2.2% GDP). In addition, expectations of further increases in offshore investment quotas (i.e. RQFII) on the back of capital account liberalization, should mean that portfolio inflows pick up, putting further appreciation pressure on RMB. With the appreciation trend intact, and carry potentially set to become more attractive as authorities push forward with interest rate liberalization; we are likely to see speculative flows into China persist. Inflation will be a key driver of the pace at which this appreciation is permitted by the authorities. The main risk to our view is from the sizeable nature of short USD positioning in this pair - both in the offshore and onshore markets. In the event of weaker economic data driven by tight monetary conditions and reforms, we could see a pickup in volatility. For now though, we stay short 12M USD/CNH with a target of 5.95. JPY/KRW heading back to single-digits The won's fate in 2014 remains a struggle between strong underlying fundamentals, and the defensiveness of the central bank in the face of concerns about a weakening yen. The fundamental story i