FX Markets

FX Markets Update

FX Markets Update

We anticipate that the rand will remain weak

The South African rand has rallied over the past few days after reaching its lowest level against the US dollar in more than a year following last week’s news about the Omicron variant. Even if the new variant doesn’t lead to a major round of renewed virus containment measures, we think that the currency will remain under pressure from both domestic and external headwinds for much of 2022. In view of the wider interest, we are also sending this FX Markets Update to clients of our Africa Economics Service

1 December 2021

FX Markets Update

Pandemic-era lessons for the Swiss franc

Given the uncertainty around Omicron, and the revealed preference of the SNB in recent weeks to largely stay out of the FX market, we would not be surprised to see the Swiss franc rise further against the euro in the near term. But any upside is limited, and the balance of risks is tilted towards depreciation in 2022. In view of the wider interest, we are also sending this Nordic and Swiss Economics Update to clients of our FX Market Service.

1 December 2021

FX Markets Update

Macro fundamentals to support further shekel strength

The Israeli shekel has appreciated sharply in the past few weeks, making it one of the best performing currencies during the pandemic. While we don’t expect this recent strength to continue in the very near term, we think that Israel’s macro fundamentals will support further appreciation over the next few years. In view of the wider interest, we are also sending this Emerging Europe Update to clients of our FX Markets service.

24 November 2021
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FX Markets Update

Lira sell-off and lessons from other “sudden stops”

The fresh falls in the Turkish lira following the CBRT’s interest rate cut today have left Turkey firmly in crisis territory and echoes of previous “sudden stops” during major EM currency crises in the past are growing louder. Without an aggressive policy response, there is a real risk of large and destabilising falls in the lira of more than 10%, with the currency bursting through 13/$ in the coming days. In view of the wider interest, we are also sending this Emerging Europe Update to clients of our FX Markets service.

FX Markets Update

Bond market volatility may be taste of things to come in FX

We think that the recent pick-up in bond market volatility will persist and that volatility in currency markets will also rise further as uncertainty around the economic outlook and monetary policy remains high.

12 November 2021

FX Markets Update

We think that the yen remains vulnerable to rising US rates

We expect the yen to weaken a bit more against the US dollar as we think that government bond yields in the US will resume their rise before long.

FX Markets Update

We expect the Brazilian real to remain under pressure

We think that the Brazilian real will weaken a bit further against the US dollar over the next year, as fiscal risks and deteriorating terms of trade continue to weigh on the currency. In view of the wider interest, we are also sending this FX Markets Update to clients of our Latin America service.

4 November 2021

FX Markets Update

We don’t expect dollar/oil correlation to stay positive for long

Despite their recent positive correlation, we think that oil and the dollar will go in opposite directions before long: we continue to think that oil prices will fall back as the supply situation improves, while we expect the greenback to stay strong against a backdrop of a hawkish Fed and a slowing global economy.

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