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.
Jonathan Petersen Markets Economist
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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

FX Markets Weekly Wrap

Continued dollar rally looks increasingly likely

The US dollar is set to end another week higher against nearly all major currencies. To a large extent, this latest rally appears to be driven by the rise in short-term government bond yields in the US relative to other major economies, notably the euro-zone. And today’s news about renewed lockdowns in parts of Europe has reinforced growing concerns about the pace of the global economic recovery. Given our view that global growth will continue to slow and inflationary pressures in the US will prove more sustained than widely anticipated, the backdrop remains favourable for the dollar to strengthen further. Indeed, the minutes of the FOMC’s last meeting (due Wednesday) could lend support to this view.

19 November 2021

More from Jonathan Petersen

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

Taking stock of the FX market reaction to the FOMC

The reaction to this week’s FOMC meeting supports our view that the US dollar will strengthen against most currencies this year.

17 June 2021
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