Filtered by Subscriptions: FX Markets Use setting FX Markets
An eventful week in financial markets is ending with the dollar down, but mounting a comeback in the wake of today’s worryingly weak US non-manufacturing ISM survey . Between the earlier softer-than-expected US non-farm payrolls , the cautious message …
3rd May 2024
Despite the correction in equity markets over the past month, risk premia generally remain low across financial markets. While we expect this to continue as an AI-driven bubble inflates in equity markets, this Update explores four areas that could …
Chinese policymakers won’t risk reliving the turmoil of 2015 by engineering a sudden devaluation of the renminbi . They may allow the currency to weaken gradually over the coming years to help industry deal with oversupply or to offset the impact of new …
1st May 2024
The US dollar has made further gains against most major currencies over the past month or so. Interest rate expectations have continued to pick up in the US and in most places outside Asia, weighing particularly on that region's currencies (prompting …
30th April 2024
We think that the recent weakness in the Mexican peso was partly a symptom of stretched positioning. Given that risk premia still appear unusually low and the outlook for the “carry trade” is gradually worsening, we think that the peso will depreciate …
Japan’s apparent intervention in support of the beleaguered yen may buy some time for the currency to stabilise, but is unlikely to lead to sustained turnaround until US interest rate expectations start to fall back. While Ministry of Finance (MoF) …
29th April 2024
The US dollar is ending the week a touch softer against most currencies despite another set of hotter-than-expected US inflation figures. But the main story in currency markets this week is the ongoing drop in the Japanese yen, which hit a new low for the …
26th April 2024
The US dollar would have to appreciate a lot further before having significant effects on the global economy and financial system. A key risk to watch for is the widening policy divergence between the US and Asia leading to a major depreciation in the …
25th April 2024
Financial markets have largely taken the latest escalation in the Middle East over the past week in stride. Having spiked from $87pb to $90pb on the news of today’s attack, Brent crude oil has now fallen back to below $88pb. Similarly, the big moves in …
19th April 2024
We think the headwinds driving the depreciation of the Chilean peso against the US dollar have largely run their course. We expect the Chilean peso to recover some ground by the end of the year. The Chilean peso has underperformed almost all other major …
18th April 2024
Continued resilience in the US economy looks set to delay the Fed easing cycle until (at least) the second half of this year, so we now think the greenback will stay strong against most currencies over the next couple of quarters. We now forecast the DXY …
16th April 2024
The US dollar has surged in the wake of another too-hot US CPI print , a dovish ECB and disappointing credit data out of China . The DXY index is now approaching its peak of last autumn (~106 currently, vs ~107 on 1 st November), and our sense is that the …
12th April 2024
The euro has fallen sharply against the greenback this week, and we wouldn’t be surprised if it weakens a bit further in the short term. That said, we think a fall below parity in the EUR/USD rate is unlikely in the absence of a substantial divergence in …
11th April 2024
Another robust US non-farm payrolls report has seen the dollar rebound a bit, unwinding some of its losses earlier in the week and putting the DXY index on track to end the week near its highest level on the year. With FOMC members continuing to signal …
5th April 2024
The US dollar has started the year on the front foot as US growth and inflation again surprised to the upside, prompting the Fed to (again) take a more hawkish stance than other major central banks. In our view, a continued rise in US Treasury yields – …
4th April 2024
The US dollar has eked out small gains against some major currencies so far this week, leaving the DXY index just below 105 at the time of writing. During an otherwise quiet week, the February PCE data release out of the US tomorrow may add to the …
28th March 2024
We continue to think that policymakers in China and Japan will do enough to keep their currencies from weakening much further, but the risk of a break lower in one, or both, is increasing. Push-back from the authorities in China and Japan has stabilised …
27th March 2024
We still expect the Canadian dollar to depreciate against the US dollar as interest rate differentials relative to the US widen and Canada’s terms of trade worsen. The Canadian dollar has held up well against the greenback relative to other G10 currencies …
The US dollar has bounced back from its brief drop after the FOMC’s policy announcement and Chair Powell’s press conference, and is ending the week stronger across the board. To some extent that is surprising: the FOMC’s overall message arguably had a …
22nd March 2024
In the wake of this week’s FOMC and BoJ policy announcements we are revising our forecast for the Japanese yen. While we still expect the Japanese yen to rebound over the course of 2024, we now project it to reach 140 by the end of the year and 135 by …
21st March 2024
The tailwinds that have underpinned the rebound in the dollar this year seem, to us, to have run their course. While we wouldn’t be surprised if the dollar stayed firm over the coming months, we still think the greenback will edge lower – particularly …
Stronger-than-expected CPI and PPI data out of the US were the key catalysts for the greenback’s rebound this week, as investors continued to pare back their expectations for the Fed to cut its policy rate. These expectations will be put to the test next …
15th March 2024
The past few months have seen risk premia compress across most financial markets, and stress across core financial markets appears lower than at any point since mid-2021. While some lingering risks remain, we think that an emerging bubble in equity …
The US dollar has risen against most currencies since the start of the year, while most of our estimates of the greenback’s “fair value” are little unchanged. Taken together, this leaves the dollar somewhat overvalued in our assessment. At this point, we …
The impact of a second Trump presidency on Mexico’s economy would depend to a large extent on whether the USMCA deal remains intact or Mexico finds itself subject to US import tariffs. If the latter, Mexico would be one of the most affected EMs. And even …
12th March 2024
Today’s softish US non-farm payrolls report , combined with Fed Chair Powell’s relatively neutral testimony to Congress earlier in the week, has put an end to the dollar’s strong start to 2024, and suggests to us that the greenback will remain on the back …
8th March 2024
The sharp narrowing in Colombia’s current account deficit last year to its lowest level since the aftermath of the Global Financial Crisis looks encouraging, but it was entirely a result of the weakness of domestic demand. As the economy recovers, the …
4th March 2024
The dollar has remained roughly unchanged against most major currencies over the past two weeks. Given that our expectations for upcoming data releases and central bank meetings – notably, nonfarm payrolls and the ECB meeting next week – are not far from …
1st March 2024
The US dollar has made further gains against most major currencies over the past month or so. Interest rate expectations have edged higher in the US and in most places outside Asia, weighing particularly on that region's currencies. While we no longer …
28th February 2024
The tailwind of US equity outperformance appears to be fading for the greenback, as the DXY Index looks set to post its first weekly fall in 2024. A pullback after such a streak isn’t all that surprising, and an upside surprise in PCE data out of the US …
23rd February 2024
We think victory for Donald Trump in this year’s US presidential election would lead to higher Treasury yields than if incumbent Joe Biden (or another candidate) won. In our view, another Trump term would also be a headwind for equities – especially …
22nd February 2024
Almost all major emerging market (EM) currencies have fallen against the US dollar so far this year, and we think they will remain under pressure until interest rate expectations in the US shift lower again. EM currencies have been no exception to the …
21st February 2024
The theme of the week has been one of diverging inflation stories which have helped boost the US dollar. These divergences came not just between economies (hot in the US and cold in the UK, for example) but also within economies, with mixed messages from …
16th February 2024
We expect India’s stocks, bonds, and currency to rally over the remainder of this year. It’s been a strong start to the year for India’s financial markets. The MSCI India Index of the country’s equities has been the strongest performer of MSCI’s large …
The rise in US bond yields has put renewed pressure on the yen, but we think further downside is limited. We still expect Treasury yields to resume their downward trend and for the yen to benefit most among G10 currencies vis-à-vis the dollar from this …
15th February 2024
Chairman Thomas Jordan’s recent comments about the franc raise questions over whether the SNB might use FX interventions to loosen monetary conditions. But we think policymakers will use the policy rate as the main tool to achieve price stability, and …
13th February 2024
While the dollar has fallen back a touch over the past couple of days, it has held on to most of its post-payrolls gains. The DXY index is now up about 3% on the year, having regained roughly half its drop over the last two months of 2023. The greenback’s …
9th February 2024
While not our base case, continued strength in the US economy would probably be a tailwind for the US dollar over the coming months. But even in that event, we think the dollar would eventually weaken as bond yields fell in the US relative to elsewhere as …
7th February 2024
The DXY index seems set to close this week at its strongest level in almost two months, breaking out of a narrow range amid a flurry of data releases out of the US. Consistent with Fed Chair Powell’s continued emphasis on data dependence, signs of …
2nd February 2024
We don’t expect the Australian and New Zealand dollars – which have been two of the worst-performing G10 currencies this year – to fall much further. It’s been a rough start to the year for the aussie and the kiwi: although all the non-US G10 currencies …
After its sharp fall at the end of 2023, the US dollar has risen against most major currencies so far this year. Interest rate expectations have rebounded a bit in the US and in most places outside Asia, weighing particularly on the region's currencies. …
30th January 2024
The US dollar seems set to remain within a tight range against most major currencies this week. At face value, the stronger-than-expected GDP data out of the US might point to a return to “higher for longer”, but the growing evidence of disinflationary …
26th January 2024
We think the current backdrop is not as favourable for the greenback as the one that prevailed during the dot com era, so we doubt the bubble in US equities we expect would be accompanied by renewed strength in the dollar over the next couple of years. …
25th January 2024
This is a special Global Economics Chart Pack that provides clients with key analysis to make sense of the macro and market impact of the disruptions to maritime shipping. The charts in this document come from our brand-new shipping dashboard , which …
The US dollar’s rebound has gained momentum this week amid hawkish rhetoric from Fed officials and more evidence out of the US – notably retail sales and jobless claims – of continued resilience in the economy there. So far this year, currency markets …
19th January 2024
We project decent near-term gains in China’s equities, think long-dated CGB yields will finish the year around their current levels, and expect the renminbi to rally against the US dollar. China’s equity, bond, and FX markets were on the back foot …
While sterling has outperformed other G10 currencies amid the dollar sell-off over the past couple of months, we expect it to reverse its gains against the greenback as short-term Gilt yields edge lower. So far this year, the pound has held up well …
16th January 2024
After a strong start to the year, the US dollar seems set to end the week broadly unchanged against most currencies, as inflation data releases out of the US this week failed to generate much of a reaction. This stalemate in currency markets has been a …
12th January 2024
We think that most major currencies in Latin American will fall against the US dollar this year. As a result, the relatively poor returns that we expect from equities in the region in local-currency terms are likely to be even worse in US dollar terms. …
The dollar’s strong start to 2024 has partly reversed today as the surprisingly weak US ISM non-manufacturing survey has more than offset another robust US non-farm payrolls report . Even so, the greenback remains up on the week as interest rate …
5th January 2024