We expect the euro to rise further against the dollar

We have revised up our forecast for the euro against the US dollar, as we expect that conditions driving the euro’s appreciation will persist over the next few years despite near-term headwinds.The euro has appreciated more than 10% against the greenback since its March lows, from ~$1.07/€ to ~$1.19/€. (See Chart 1.) Even so, we think that the exchange rate…
Jonathan Petersen Markets Economist
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FX Markets Weekly Wrap

FX markets likely to remain volatile into year-end

After rallying to its highest level of the year last week, the US dollar seems set to end this week broadly unchanged. In our view, this reflects the offsetting effects of rising short-term yields in the US (particularly after Chair Powell’s comments to Congress on Wednesday) and falling long-term yields amid growing concerns about the Omicron variant. Despite today’s mixed payrolls report, we think the bigger picture remains that sustained inflationary pressures in the US are likely to support faster policy normalisation by the Fed and keep the dollar strong. In addition to uncertainty about the Omicron variant, we expect next week’s CPI data from the US and the wide range of central bank meetings to keep volatility in FX markets elevated throughout December.

3 December 2021

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 Weekly Wrap

COVID throws another curveball

News late yesterday of a new and potentially more dangerous variant of COVID-19 emerging in South Africa has made a dramatic impact on financial markets today. In general, market shifts have been similar to those in previous periods of renewed uncertainty around the path of the pandemic. Risky assets and currencies have fallen across the board today, while bond yields have dropped sharply and safe havens – notably the yen – have rallied. Short-term rate expectations, which had risen significantly in the US and other DMs over recent months, have been pared back rapidly.

26 November 2021

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Capital Daily

Making sense of the mixed signals behind US dollar strength

The US dollar has strengthened against most currencies, despite the fall in the yield of 10-year US Treasuries. We think that the greenback will appreciate further, aided by a rise in long-term Treasury yields.

1 July 2021

FX Markets Weekly Wrap

US ISM and payrolls could add fuel to the dollar rally

The US dollar seems set to end the week slightly weaker, but has held much of its gains following last Wednesday’s FOMC announcement. With increasing focus on the prospects for monetary tightening globally, next week’s employment and survey data in the US may push the dollar higher, if they back up the Fed’s optimistic assessment of the economic outlook.

25 June 2021

FX Markets Update

We think that the yen will weaken further before long

We expect the yen will continue to depreciate against the US dollar this year as 10-year US Treasury yields resume their rise.

18 June 2021
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