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Will the ECB & BoJ fight back against depreciation?

Although it has dropped back a little today, the US dollar is on track for another strong week, rising further against all other major currencies and hitting a new 20-year high. At the time of writing, the greenback was at or around our end-2022 forecasts against most major currencies. As we discussed here and here, while we are sticking to our existing forecasts for now, the risks are increasingly skewed towards further dollar strength.
Jonas Goltermann Senior Markets Economist
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FX Markets Weekly Wrap

Dollar falters on continued risk-on rally

The US dollar continued to struggle this week as equity markets extended their rebound and commodity prices also rallied: the currencies of commodity exporters and other economies most exposed to global growth generally fared well. Wednesday’s lower-than-expected US CPI data provided the latest catalyst: the S&P 500 rose around 2% following the CPI report, and the DXY index registered one of its worst days in recent years, falling by more than 1%. Nonetheless, further hawkish comments from FOMC members, weak credit data out of China and today’s strong US consumer confidence survey have provided some support for the greenback. Our sense remains that the dollar rally will resume before too long. It will take a lot more good news on inflation before the Fed changes tack. The minutes from the last FOMC meeting, released next week, and the Jackson Hole conference the week after may well push back further against the notion that the Fed is “pivoting”.

12 August 2022

FX Markets Update

We doubt the Canadian dollar’s resilience will last much longer

The Canadian dollar has held up relatively well against the US dollar so far in 2022, but we think the factors underpinning the loonie’s resilience will fade and push it lower against the greenback over the next couple of years. In view of the wider interest, we are also sending this FX Markets Update to clients of our Canada Service. 

11 August 2022

FX Markets Update

Why we don’t think the dollar has peaked yet

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11 August 2022

More from Jonas Goltermann

FX Markets Update

Taking stock of the dollar’s rally

With the DXY index surging to a fresh 20-year high, the US dollar has reached our end-2022 forecasts against several of the other major currencies. While we are sticking to our current forecasts for now, this Update considers how the factors underpinning the greenback’s rise might evolve. ECB Preview (19th July, 10:00 ET/15:00 BST): Our Europe team will be briefing on what to expect from the ECB ahead of its crunch July meeting. They’ll be talking about lift-off for rate hikes, what a weak euro means for policy`, the Transmission Protection Mechanism and much more. Register now.

15 July 2022

Capital Daily

EUR/USD: To parity and beyond?

While the euro’s rapid fall over the past couple of weeks means that a lot of bad news about the euro-zone economy now appears to be discounted, the trends driving the common currency lower may persist for some time yet.

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FX Markets Weekly Wrap

The dollar breaks through; more to come?

The US dollar has continued to surge this week, with the key EUR/USD rate breaching a two-decade low and approaching the symbolic parity level as fears around Europe’s energy supply worsened. Solid US data, in particular today’s stronger-than-expected payrolls, and continued hawkish rhetoric from FOMC officials reinforced the growing divergence between the increasingly bleak outlook in Europe and the more resilient US economy. With little relief on the horizon for Europe, and next week’s US inflation data likely to mark a new high for the year and keep the Fed hiking aggressively in the near term, we think the risks remain skewed in favour of the greenback. Indeed, as we discussed yesterday, we think the EUR/USD rate will break through parity before long, and may well trade some way through that level.

8 July 2022
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