We expect the rally in commodity currencies to be short-lived

Although we wouldn’t be surprised if energy prices remained elevated for a while, we still think they will fall back over the next year, weighing on the currencies of net energy exporters.
Joseph Marlow Assistant Economist
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FX Markets Weekly Wrap

US dollar edges lower ahead of next round of CB meetings

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 rise and expectations for Fed rate hikes in the second half of next year solidifying, we think the dollar will remain strong over the coming months. The upcoming week kicks off the next round of central bank policy announcements, with the ECB and the BoJ (neither of which we think will alter their policy settings), as well as the Bank of Canada, (which we expect to signal the end of its balance sheet expansion). To the extent that next week reinforces the widely held view (which we share) that the ECB and BoJ will remain well behind other central banks in normalising policy, it may add to downward pressure on the yen and euro.

22 October 2021

FX Markets Update

Most signs point to further trouble for the Turkish lira

We expect the Turkish lira to remain among the worst-performing currencies over the next two years, as political pressures, high inflation, and a vulnerable external position continue to weigh on the currency.

22 October 2021

FX Markets Weekly Wrap

US dollar falls back as Treasury yields edge down

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 inflation data released Wednesday. But we think those data add to evidence that inflationary pressures in the US remain strong, and will gradually push Treasury yields, and the dollar, higher. And while this week’s rebound in risky assets suggests that concerns about the global economic recovery are fading, the latest activity data from China and the US (due on Monday) are likely to set the tone for FX markets next week.

15 October 2021

More from Joseph Marlow

Capital Daily

We expect long-dated Treasury yields to rise further still

The 10-year Treasury yield rose to its highest level since June on Friday amid growing concerns about inflation. We forecast that the yield will rise further over the coming years, as investors reassess how much the Federal Reserve will need to tighten policy to keep it under control, or else demand even greater compensation for inflation than they are now.

8 October 2021

FX Markets Update

We think the Norwegian krone’s rally is nearing its end

Although the krone has rallied this year on the back of high energy prices and the expectation of tighter monetary policy, we do not expect this to continue. We think slowing global growth and normalising energy prices will work against the krone over the next 12-18 months. Our view is that these headwinds will be balanced by more hawkish monetary policy, resulting in a broadly stable outlook for the krone. In view of the wider interest, we are also sending this FX Markets Update to clients of our Nordic & Swiss service

7 October 2021

Capital Daily

We doubt the rally in the US dollar is over

Even if the US dollar falls back a bit further in the near term, we expect it to resume its recent rally in due course.

30 September 2021
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