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Despite its recent resurgence, we continue to think that the euro will weaken against the dollar this year. Since the end of March, the euro has appreciated by about 4% against the dollar, and at ~1.22 the EUR/USD exchange rate is now back roughly where …
19th May 2021
This Update sets out the main calls of our new FX service. As part of our expanded coverage of currency markets, we will maintain and continuously update this set of core predictions. Our first FX Outlook includes more detailed analysis, as well as …
12th May 2021
We expect higher government bond yields in the US than in other developed markets (DMs) to push the US dollar up, as has generally been the case since the Global Financial Crisis. Admittedly, the relationship between the government bond yield gap and the …
8th April 2021
We now expect that the US dollar will strengthen somewhat over the next couple of years as the US economy outperforms and its policy mix diverges from that in most other major economies. Last year, the US dollar went through two distinct phases. The …
11th March 2021
The rise of government bond yields in the US and other developed markets (DMs) this year has made a significant impact on currency markets and, if it continues, would challenge our forecast for a weaker dollar. For most of last year, the primary driver of …
5th March 2021
Given our latest forecast for oil prices, we now expect the Canadian dollar to rise further in 2021 than we previously thought, but to drop back a bit in 2022. Despite already rising more than 15% against the US dollar from the last year’s low, we think …
25th February 2021
While we expect that EM currencies in general will rise further this year due to strong appetite for risk and a recovering global economy, we think several headwinds will limit their appreciation. For a start, EM currencies as a group have already …
19th February 2021
The pound has performed better than all other G10 currencies so far in 2021 (see Chart 1), rising from $1.36 at the start of January to almost a three-year high of $1.41 now. We expect the strength of sterling against the US dollar to continue and have …
11th February 2021
While we have revised up our end-2021 forecasts for the Australian dollar and the New Zealand dollar against the US dollar to reflect the strength of their recent rallies, we still think that the Kiwi will outperform the Aussie over the next couple of …
11th January 2021
Although several factors could conceivably support the dollar in the near term, we still think it will weaken overall this year as Fed policy remains accommodative and appetite for risk continues to grow. The first factor that could potentially drive the …
We expect both the Swedish krona and the Norwegian krone to appreciate against the euro and the dollar in 2021. However, in contrast to 2020, we expect the NOK to outperform the SEK slightly this year. The fortunes of the Swedish krona and Norwegian krone …
7th January 2021
While the real yield differential between the US and the euro-zone has moved against the euro recently we doubt that this trend will continue. And, in any case, we think that factors other than changes in real yield differentials will continue to push the …
16th December 2020
We think that the inverse relationship between the dollar and risk appetite will remain strong over the next couple of years, against a backdrop of low and stable interest rates. We expect that the dollar will weaken further and risky assets continue to …
10th December 2020
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 …
20th November 2020
While the final results are yet to be determined, whoever wins the US presidency probably faces continued gridlock in Congress. That may explain why the moves in markets overall so far have been limited. Admittedly, Treasury yields have fallen as the …
4th November 2020
We think that the Swedish krona will appreciate a little further against the euro and the dollar in 2021, but doubt that it will remain one of the best-performing G10 currencies, as it has been this year. The Swedish krona has been the …
2nd November 2020
We are upgrading our already above-consensus forecast for the Canadian dollar, as we expect higher oil prices, stronger-than-expected GDP growth, and favourable interest rate differentials to drive a continued appreciation over the next two years. Those …
19th October 2020
We have revised up our already-bullish forecasts for the Australian dollar and the New Zealand dollar against the US dollar over the next few years, to reflect changes to our outlook for the Chinese renminbi. Crucially, though, this view hinges on …
8th October 2020
Despite falling back a little this week, we still expect most currencies in the Asia-Pacific region to make headway against the dollar over the next couple of years, led by a stronger renminbi. As we set out here , we have changed our view on the Chinese …
25th September 2020
Despite its recent rally, the euro is not particularly strong in our view, and we think that it could well rise further over the next couple of years. Since its lows in mid-March, the euro has gained about 10% against the US dollar, rising from $/€1.06 to …
11th September 2020
While we think the US dollar will weaken a bit further this year, suggestions that its role as the world’s primary reserve currency is in jeopardy are wide of the mark in our view. Although it has stabilised a bit over the past couple of weeks, the dollar …
19th August 2020
While we think that nominal interest rates and bond yields in developed markets will remain around their current ultra-low levels for some time, we think that their real counterparts will fall further in the US relative to the euro-zone and Japan. In our …
18th August 2020
Over the past few months, the euro and the BTP-Bund spread have moved closely together, with the euro strengthening as the BTP-Bund spread narrowed and vice versa. (See Chart 1.) We think that this pattern will persist over the remainder of this year . …
24th July 2020
Although the US dollar has stabilised over the past month or so as fears about a second wave have held back the rebound in risky assets, we continue to think that it will lose further ground over the rest of 2020, unless the resurgence of new cases …
20th July 2020
While the euro and many euro-zone assets have rallied significantly over the past two months, we think that there is scope for them to make more headway this year . To recap, during this period the euro has gained ground against the US dollar and is now …
26th June 2020
If we are right that commodity prices will make up more ground as economies continue to reopen, the rally in commodity currencies may have further to go. Australia, Canada, New Zealand and Norway are heavily reliant on exports of commodities (see Chart …
19th June 2020
While we think that much of the rebound in emerging market (EM) currencies is now behind us, we still expect that most of them will make a bit more headway against the dollar in the second half of the year. Last week we revised down our forecast for the …
16th June 2020
We now expect that the US dollar will depreciate further as risky assets resume their rebound and the global economy recovers from the coronavirus pandemic. At the start of the year, we forecast that the dollar would strengthen further in 2020 as …
12th June 2020
We continue to think that most EM currencies will end the year higher than their current levels, even if they face further turbulence. But we don’t expect them to recover as strongly as they did after the GFC. As we have discussed previously , emerging …
17th April 2020
While the worst may be yet to come for emerging market currencies, we expect that most will end this year stronger than they are now. Emerging market currencies have had a difficult year so far : our equal-weighted index of twenty large EM currencies has …
1st April 2020
While we think that most currencies will eventually regain much of the ground that they have recently lost to the US dollar, we don’t expect that process to start until the pandemic has clearly passed its worst . The US dollar has strengthened this year …
24th March 2020
The slump in the prices of commodities has hit hard the currencies of the countries whose fortunes depend heavily on them. (See Chart 1.) But if we are right and commodity prices eventually recover as the coronavirus pandemic is brought under control, …
23rd March 2020
While some of the large shifts in the FX market over the past weeks may unwind if the coronavirus epidemic fades, we have revised some of our forecasts to reflect the sharp fall in US interest rates and the price of oil. Before the global spread of the …
12th March 2020
While the euro has already fallen to its lowest level in nearly two years against the US dollar, we think that it will drop a bit further during the rest of 2020, pushed down by several factors including a weaker economic outlook and looser monetary …
19th February 2020
We think that the greenback will remain strong this year, even if some of its recent strength may unwind. The dollar has started the year on the front foot : since 1 st January it has appreciated by about 3% on average against other G10 and 2% against …
17th February 2020