Author Archive

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. […]

Is there an end to the US dollar’s weakness?

Following disappointing US economic data and another failure to form a Republican majority on key legislation, the US dollar has slipped to a 10-month low, at 94.68 on 18 July. This extreme USD weakness has led to strong negative market sentiment, as highlighted by speculative positions on the futures market. Although we acknowledge that the […]

Major currencies’ outlook

Our latest forecasts for major currencies over the coming months can be summarised as follows: US dollar. In terms of duration and valuation, the USD up-cycle is likely close to ending. However, the USD is likely to remain strong on the back of robust US growth and the outlook for inflation. It should also benefit […]

The dollar should rebound in the coming months

The euro appreciated significantly against the US dollar (by as much as 1.4% at one stage) on 27 June, reaching a 10-month high. The main reaon was a speech by ECB President Mario Draghi at the ECB forum on central banking at Sintra. To a lesser extent, the ongoing struggle to find legislative consensus among […]

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