A monthly commentary/summary that discusses our broader, long-term currency analysis.
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Andrew Kositkun Foreign Exchange Head Trader
In last month's outlook, we touched on the dovish pivot from the Federal Reserve and highlighted it as a key driver of the USD. In short, Jay Powell confirmed a "Powell Put" by indicating that the Fed remains willing to provide policy accommodation as well as flexibility with its balance sheet normalization program. Read more...
In our last outlook, we mentioned that we remained cautiously constructive on the euro in 2019 but expected the euro to remain pressured in the near term, and the economic data has played out accordingly. Eurozone growth, which ended 2018 on a negative note, has remained weak to start the New Year. Read more...
We have been harping on Brexit as a key driver for the GBP and, with all due apologies for repetition, the month of March will be the epitome of this because of the March 29 deadline when the UK is set to crash out of the EU. Read more...
Three main themes are set to influence the JPY over the next couple of months. These are the dovish turns from the Federal Reserve that put a bearish slant on US yields, seasonal factors around Japan's fiscal year end (March 2019) and heightened concern around a global slowdown. Read more...
Since the beginning of the year, the CAD has reversed course from its weakening trend to strengthen to levels not seen since November 2018. A reversal of course in global equities to start the New Year accompanied by commodity outperformance have changed the short term dynamics in favor of the CAD. Read more...
The AUD went on a bit of a monetary policy rollercoaster this past month. Initially, the AUD strengthened as the Reserve Bank of Australia (RBA) issued a post-meeting statement that held onto the bank's "glass half full" narrative more than the market expected. Read more...
After sharply depreciating for most of last year, the CNY has been one of the top performing Asian currencies since the New Year correlating strongly with a sharp Chinese equity market recovery. This appreciation has been driven by the December trade truce with the US and subsequent positive developments in trade negotiations with President Trump announcing an extension of the imposition of further tariffs. Read more...
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