We expect the rally in commodity currencies to be short-lived

Although we wouldn’t be surprised if energy prices remained elevated for a while, we still think they will fall back over the next year, weighing on the currencies of net energy exporters.
Joseph Marlow Assistant Economist
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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

FX Markets Chart Book

US dollar bull market might just be getting started

The dollar has risen to its strongest level in more than a year and, though it is not our central forecast, we think the risk of a more sustained dollar bull market is increasing.

19 November 2021

More from Joseph Marlow

Capital Daily

We expect long-dated Treasury yields to rise further still

The 10-year Treasury yield rose to its highest level since June on Friday amid growing concerns about inflation. We forecast that the yield will rise further over the coming years, as investors reassess how much the Federal Reserve will need to tighten policy to keep it under control, or else demand even greater compensation for inflation than they are now.

8 October 2021

FX Markets Update

We think the Norwegian krone’s rally is nearing its end

Although the krone has rallied this year on the back of high energy prices and the expectation of tighter monetary policy, we do not expect this to continue. We think slowing global growth and normalising energy prices will work against the krone over the next 12-18 months. Our view is that these headwinds will be balanced by more hawkish monetary policy, resulting in a broadly stable outlook for the krone. In view of the wider interest, we are also sending this FX Markets Update to clients of our Nordic & Swiss service

7 October 2021

Capital Daily

We doubt the rally in the US dollar is over

Even if the US dollar falls back a bit further in the near term, we expect it to resume its recent rally in due course.

30 September 2021
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