What China’s economic slowdown may mean for FX markets

The growing risks associated with the property sector in China underscore our view that the renminbi will weaken against the US dollar before long, even if financial stability risks do not escalate much further. We think the currencies of some economies with strong ties to China will come under pressure, too.
Jonathan Petersen Markets Economist
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FX Markets Weekly Wrap

US dollar edges lower ahead of next round of CB meetings

With a couple of exceptions, currency markets have had a quiet week; the US dollar is ending the week a touch weaker against most other currencies, but in aggregate it remains close to its strongest level for the year. With US bond yields continuing to rise and expectations for Fed rate hikes in the second half of next year solidifying, we think the dollar will remain strong over the coming months. The upcoming week kicks off the next round of central bank policy announcements, with the ECB and the BoJ (neither of which we think will alter their policy settings), as well as the Bank of Canada, (which we expect to signal the end of its balance sheet expansion). To the extent that next week reinforces the widely held view (which we share) that the ECB and BoJ will remain well behind other central banks in normalising policy, it may add to downward pressure on the yen and euro.

22 October 2021

FX Markets Update

Most signs point to further trouble for the Turkish lira

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22 October 2021

FX Markets Weekly Wrap

US dollar falls back as Treasury yields edge down

The US dollar seems set to end the week lower against most currencies, as “risky” assets have rallied and US Treasury yields have edged down a bit. This fall back in the dollar and US yields is somewhat surprising in light of the stronger-than-expected inflation data released Wednesday. But we think those data add to evidence that inflationary pressures in the US remain strong, and will gradually push Treasury yields, and the dollar, higher. And while this week’s rebound in risky assets suggests that concerns about the global economic recovery are fading, the latest activity data from China and the US (due on Monday) are likely to set the tone for FX markets next week.

15 October 2021

More from Jonathan Petersen

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We doubt the rally in the US dollar is over

Although the US dollar, in aggregate, has fallen back sharply from its high of the year over recent weeks, we expect it will soon reverse course and strengthen against most currencies. CE Spotlight 2021: The Rebirth Of Inflation? We’re holding a week of online events from 27th September to accompany our special research series. Event details and registration here.  

10 September 2021

FX Markets Weekly Wrap

Dollar remains on the back foot after August payrolls

The US dollar was little changed following the surprisingly weak August payrolls data, despite a small rise in US government bond yields. It looks set to end another week lower against most currencies, leaving the trade-weighted dollar near its lowest level since its jump after the June FOMC meeting

3 September 2021

FX Markets Update

We expect the Swedish krona to outperform the UK pound

We think that the prospects for monetary tightening point to an appreciation of the Swedish krona relative to the UK pound over the next 6-18 months.

2 September 2021
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