The war in Ukraine has generated two clear effects in FX markets: the European currencies most immediately exposed to the war and its economic fallout have fallen against the US dollar, while most commodity currencies have strengthened as commodity prices …
4th March 2022
Although many commodity prices are already back to levels last seen in 2008, there is still scope for prices to rise further if Western sanctions are extended to cover energy commodities . (At the end of this Weekly Wrap , we publish forecasts in a …
The Russian invasion of Ukraine early on Thursday morning has, aside from the ruble, so far made only limited impact on currency markets. The US dollar and other safe havens rose sharply on news of the invasion, accelerating the shifts over the previous …
25th February 2022
We have raised most of our commodity price forecasts this week to account for Russia’s invasion of Ukraine and the heightened risk of disruption to commodity supply . Given that Russia is a leading exporter of many commodities, prices will stay high so …
Although it has rebounded today, the US dollar lost a little ground against most major currencies over the week as a whole, as the FOMC minutes prompted a scaling back of market expectations for Fed tightening and risk sentiment see-sawed on continued …
18th February 2022
It was a rollercoaster week for many commodities as tensions between Russia and the West over Ukraine ebbed and flowed and the West held talks with Iran over a new nuclear deal. In the end, it was signs of progress in the Iran talks that pushed oil prices …
The US dollar seems set to end the week broadly unchanged against most major currencies despite a favourable shift in government bond yield differentials. While we suspect there is limited scope for a further rise in short-term US Treasury yields, our …
11th February 2022
Growth in China’s economy has slowed sharply and US interest rate expectations have jumped but commodity prices continue to hold up well . In some cases, constrained supply explains the resilience in prices and, in others, there are fears of supply …
A week after the FOMC’s hawkish message sent the US dollar soaring, the ECB delivered an even bigger surprise at yesterday’s policy meeting by opening the door to policy rate hikes later this year. That resulted in the euro’s largest single-day gain …
4th February 2022
OPEC+’s reluctance to consider a more radical adjustment in its output policy this week raises the risk that production falls short of the group’s target this year . Admittedly, the group agreed to a further 400,000 bpd increase in output in March. But it …
Sovereign dollar bond spreads have widened significantly in several Frontiers over the past couple of months, driven largely by country-specific factors. There are reasons to be hopeful that outright sovereign defaults can be avoided in Ukraine and Ghana, …
3rd February 2022
The trade-weighted US dollar reached its highest level since July 2020 this week after short-term rate differentials moved strongly in its favour following Wednesday’s hawkish FOMC meeting . Admittedly, with so many Fed rate hikes discounted this year, we …
28th January 2022
The US Fed announced at its meeting this week that it will “soon be appropriate” to raise interest rates and hinted that a hike was coming as soon as March . (See here .) The US dollar strengthened, with the DXY index hitting an 18-month high of over 97, …
The trade-weighted US dollar seems set to end the week a bit higher, reversing some of its recent decline. But the dollar strength has mostly been against G10 currencies; despite the fall in US equities this week, the “riskier” emerging market (EM) …
21st January 2022
Despite falls in the prices of most other risky assets, including equities, commodities held up well this week . The prices of equities and commodities tracked each other relatively closely throughout the pandemic, but they have diverged sharply since the …
Despite several events in the US this week which would usually point to a stronger dollar – the highest US inflation print since the early 1980s , hawkish comments from both Chair Powell and Vice Chair Brainard, and a sharp rise in short-dated government …
14th January 2022
Most commodity prices increased this week, with coal prices leading the pack on the back of Indonesia’s ban on coal exports this month. That said, we don’t see commodity prices rising for much longer . Indeed, Chinese imports of most raw materials fell …
Today’s US non-farm payrolls report had little impact on currency markets, with the dollar set to end the week broadly unchanged against most other currencies. This extends a pattern of low volatility in FX markets over the past few weeks, leaving the DXY …
7th January 2022
The experience of South Africa (see here ) with the Omicron variant seems to have allayed investors’ fears over commodity demand. Indeed, the net long position held by investors in the oil futures market has begun to rise, indicating an improvement in …
This week’s much-anticipated round of central bank policy announcements made only limited impact on currency markets, which for the most part are broadly unchanged on the week. Indeed, despite the significant hawkish shift in the FOMC’s message on …
17th December 2021
It was a week of central bank decisions, culminating in ‘Super-Thursday’. (See our Drop-In here .) The big picture is that central banks generally sounded more concerned about the rise in inflation , despite the ongoing spread of the Omicron variant. …
Today’s US CPI data produced a relatively limited reaction in the US dollar, which is set to end the week a bit weaker against most major currencies. Attention now turns to the 17(!) central bank meetings next week, including the Fed, ECB, BoE, and BoJ. …
10th December 2021
After rallying to its highest level of the year last week, the US dollar seems set to end this week broadly unchanged. In our view, this reflects the offsetting effects of rising short-term yields in the US (particularly after Chair Powell’s comments to …
3rd December 2021
Oil prices fell briefly on Thursday after OPEC+ decided to push ahead with its plan to raise oil output by 0.4m bpd a month, despite plunging oil prices since news of Omicron broke . Prices recovered shortly after, though, probably because OPEC+ left the …
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 …
26th November 2021
Most commodity prices fell on Friday after South African scientists declared they had identified a new COVID-19 variant on Thursday which may be more transmissible. We think it’s still early days to say what this means for the global economy, but it has …
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 …
19th November 2021
This week showed that the energy crisis is not in the rear-view mirror just yet . Germany’s energy regulator suspended its certification process of the Nord Stream 2 pipeline on Tuesday, owing to issues regarding the organisational structure of the …
The US dollar has continued to grind higher against major currencies following the release of US inflation data on Wednesday, with the DXY index reaching its strongest level in over a year. Recent data, in particular the strong inflation figure this week …
12th November 2021
Despite falling short of its targeted increase in output once again in October, we think OPEC+ will continue to snub calls to raise output more rapidly . The week began with comments from the Biden Administration that OPEC+ was imperilling the global …
The precipitous decline in Sri Lanka’s foreign exchange reserves means the risk of a near-term sovereign debt default is increasing. Elsewhere, Tunisia also stands out on account of its public debt problems. Fiscal challenges look severe in Ghana, Oman …
11th November 2021
After another week of wild swings in short-term interest rate markets, the US dollar is ending the week stronger against most major currencies. On a trade-weighted basis it is now near its strongest level since last November. Neither the Fed meeting nor …
5th November 2021
Most commodity prices fell this week, adding to the sense that the recent rally is close to a peak (if it hasn’t peaked already) . Either way, we think energy prices will be falling next year on weaker demand growth and greater supply, contributing to …
Currency markets remained remarkably stable for most of this week, although the US dollar is rallying sharply today on the back of data showing very strong wage growth in the US, even as a major reassessment of the pace of monetary policy normalisation in …
29th October 2021
It is perhaps too soon to call the end of the energy price rally, but the prices of European natural gas and Chinese coal took a tumble this week as supply fears were, at least partially, allayed. What’s more, the recent surge in oil prices stalled. …
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 …
22nd October 2021
The meteoric rise in energy commodity prices over the last few months lost momentum this week . Natural gas and coal prices were down particularly sharply in Europe after President Putin reiterated comments that there is scope for a rise in supply from …
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 …
15th October 2021
Most commodity prices increased this week . Optimism over electrification, which was a hot topic during LME Week, seemed to feed through into higher industrial metals prices. But the prices of energy commodities were the pick of the bunch . Brent crude …
Commodity prices generally rose this week, helped by the US senate approving a deal to increase the federal debt ceiling . After a rollercoaster of a week, European natural gas prices ended the week lower following comments from President Putin that …
8th October 2021
Despite the rise in US Treasury yields this week, the US dollar reversed some of its recent gains after today’s labour market data were somewhat weaker than expected . But given strong wage growth, we doubt this will alter the Fed’s policy path. Indeed, …
In another volatile week, the US dollar continued to appreciate against most other currencies, reaching its strongest level, in aggregate, since last November. In part, the greenback’s rally may have been driven by month- and quarter-end flows, and it has …
1st October 2021
Commodity prices generally rose this week , but especially energy prices, which continued to surge on constrained supply, unseasonably high demand and low stocks. That said, we think the supply shortfalls will prove temporary and expect energy prices to …
Commodity prices held up well this week , despite the hawkish tone of the Federal Reserve and continued worries over a messy default by Evergrande, the Chinese property developer. Notably, European natural gas and Asian LNG prices continued to climb , …
24th September 2021
In a choppy week dominated by some surprising central bank announcements and the ongoing uncertainty around China’s property sector, the US dollar continued to make some headway, especially against emerging market currencies. The FOMC delivered another …
The dollar has risen against most currencies as markets have remained quiet ahead of next week’s monetary policy announcements. In addition to the FOMC, more than a dozen central banks in developed and emerging market economies will meet during a week …
17th September 2021
Most commodity prices ground higher this week. And, stepping back, we think events this week highlight three key themes to watch in the months ahead . First, natural gas prices show no sign of easing back, and are likely to remain high until early next …
After weakening over the preceding two weeks, the US dollar has rebounded against most other currencies this week. Nonetheless, last week’s disappointing payrolls report and the slightly less upbeat tone in recent comments from FOMC members appear to have …
10th September 2021
Commodity markets have been relatively quiet over the last few weeks , with many prices trading in a narrow range. There are a few exceptions, most notably the prices of natural gas and coal , which have soared on the back of surging power demand and …
There wasn’t a clear direction in commodity markets this week, with most prices driven by commodity-specific factors . Natural gas and coal prices continued to surge, while the prices of some industrial metals struggled on the back of weaker China PMI …
3rd September 2021