The euro has significantly appreciated against the US dollar since the start of the year (roughly 7% by 8 June). The single currency has benefited from strong activity in Q1, higher inflation and reduced political uncertainties in the euro area, especially after the French presidential election. Meanwhile, the US dollar has been damped by weak […]
The monetary policy meetings of the European Central Bank (ECB) on 9 March and of the Federal Reserve on 15 March have put upward pressure on the euro versus the US dollar. Euro area real rates have risen on prospects for an early rate hike whereas US real rates have declined on the perceived dovishness […]
In 2016, the sharp rebound in oil prices and the November Opec deal to cut oil production have been supportive of oil-producer currencies like the Norwegian krone and Canadian dollar. However, we believe the oil price is likely to stabilise at around USD55 in 2017, close to where it already is. In an environment where […]
At their February monetary meeting, both the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) kept their official cash rates unchanged at 1.50% and 1.75% respectively. However, given our view that New Zealand’s economic fundamentals are better than Australia’s, the temporary weakness of the New Zealand dollar that stemmed from […]
Our latest forecasts for individual currencies in 2017 can be summarised as follows: US dollar. The USD is likely to remain strong on the back of an improving US growth and inflation outlook as well as continued monetary policy divergence. Our base case scenario is for a Trump administration that puts the emphasis on growth […]
US dollar/euro. The recent break to a fresh 14-year price low after 21 months of consolidation opens the way for a move towards parity in the EUR/USD rate in the next few months. Still, growth in the US is likely to be hurt in the coming months by the ongoing tightening in monetary conditions brought […]
Our core scenario foresees risk appetite remaining robust as President Trump adopts a more moderate stance on protectionism than his past rhetoric would suggest. The USD should appreciate most against low-yielding currencies. But while we acknowledge that fundamental drivers also justify further USD strength, we believe that the long-term trend of USD appreciation is reaching […]
Sterling declined by roughly 6% against the US dollar within a few minutes on currency markets on 7 October. Whatever the reasons for the sudden plunge, and although there was a rapid (but partial) recovery in sterling’s value, it is quite worrying to see a major currency moving so much without any key trigger. Consequently, […]
At its 4 October monetary policy meeting, the Reserve Bank of Australia (RBA) left monetary policy stance broadly unchanged, with the cash rate remaining at 1.50%. This was the first monetary policy meeting under the RBA’s new governor, Philip Lowe. The broadly unchanged statement the RBA released at the end of its meeting suggested that […]
After a strong performance in the first half of this year, gold has been moving within a range of USD1300- USD1375 per troy ounce. While physical supply and demand favour a gradual rise in gold prices over time, some of the main drivers of investment demand (financial stress, inflation, real interest rates, the USD) do […]
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