Author Archive

Less scope for yen and Swiss franc depreciation

The start of the year has seen the Japanese yen and Swiss franc appreciate strongly against the US dollar (they rose by 5.6% and 4.4% respectively between 1 January and 22 February) despite higher US yields. However, this rise in US yields came with heightened market volatility, favouring safe haven currencies such as the yen […]

Our emerging market currencies scorecard gives good marks to real and rouble

Our Emerging Market (EM) FX scorecard, designed to assess the attractiveness of a given currency over the coming 12 months, ranks 10 EM currencies according to key criteria. The indicators we singled out to analyse the relative attractiveness of EM currencies are growth, inflation, valuation, carry, vulnerability to external shocks, trade and idiosyncratic drivers. All […]

US dollar: down but not out

Given the boost to US growth from the tax cuts, one might ask why, between the ratification by the US Congress of the Trump tax cuts on 19 December and 26 January, the US dollar index lost roughly 4.6%. We see two key drivers behind recent dollar weakness: the growth differential between the US and […]

USD likely to peak against yen in first half of 2018

From 6 November to 28 November, the Japanese yen gained 2% against the US dollar, outperforming all G10 currencies but the euro. In our view, the key driver of the USD/JPY rate is the 10-year real rate differential, especially since the introduction of the yield-curve-control (YCC) framework by the Bank of Japan (BoJ) on 21 […]

Good things come to those who wait

Recent months have not been kind to Scandinavian currencies: the Swedish krona and the Norwegian krone lost, respectively, 4.3% and 4.7% against the euro from the start of September to 24 November. The weakness of the Swedish krona could be explained by some disappointment at the re-election of the very dovish Stefan Ingves as Riksbank […]

No rate hike support in sight for antipodean currencies

At their November monetary meeting, both the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) kept their official cash rates unchanged at, respectively, 1.50% and 1.75%. The RBA sounded relatively cautious given low wage growth and high household debt. The RBNZ was more upbeat in light of the potential for […]

Limited scope for further drop in euro against the dollar

The US dollar has appreciated against the euro since 8 September and is getting close to our short-term forecast of USD1.15 per EUR. This recovery has been mainly driven by supportive US data, monetary policy divergence and hopes of tax reform. In the short term, robust US economic activity, a Fed that is still in […]

Downward pressure on Swiss franc could fade in 2018

The Swiss franc remains weak, notably against the euro, despite geopolitical tensions, elevated political uncertainty in Spain and some euro weakness relative to the US dollar. This means that the unattractiveness of the franc (based on its high valuation and low yield) outweighs its defensive features. In the short term, given interest rates differentials, we […]

Contrasting outlooks for precious metals

While gold prices have risen about 12% per troy ounce since the beginning of this year, we still have a constructive view of the gold price over the next 12 to 18 months. But does this mean that the outlook for precious metals in general is positive? Notwithstanding fluctuations in the US dollar, gold has […]

Long-term US dollar cycle has probably peaked

The US dollar index has declined significantly this year, challenging our constructive view on the US dollar. Disappointment regarding potential US tax reform, the decline in US inflation, the significant overvaluation of the greenback and strong economic recovery in the rest of the world all help explain a large part of the US dollar’s decline. […]

  1. 1
  2. 2
  3. 3
  4. 4

Our site and the information it contains is not intended to US citizens, US residents, Canadian citizens or Canadian residents.

I am not a US citizen, US resident, Canadian citizen and/or Canadian resident
I am a US citizen, US resident, Canadian citizen and/or Canadian resident