News & Analysis

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UK jobs report bolsters further tightening by the Bank of England

UK jobs report bolsters further tightening by the Bank of England

On balance, the UK labour market is looking similar to pre-pandemic levels, which bodes well for further tightening by the BoE. Until tomorrow’s CPI reading, the calendar remains empty for the UK and much of the price action for sterling is set to result from US Treasury moves. Read more

USD Outlook: Factoring in the stall in hawkish Fed pricing

USD Outlook: Factoring in the stall in hawkish Fed pricing

Since the Federal Reserve’s December meeting, the DXY index has fallen by 1.5% despite data released over the same timeframe for December showing the unemployment rate falling below 4% and inflation data rising to a near 40-year high. Read more

PBOC cuts key rate for the first time since April 2020

PBOC cuts key rate for the first time since April 2020

This morning, China’s Q4 GDP figure showed a slowdown in growth from 4.9% to 4.0% YoY, well above the consensus of a 3.3% YoY increase, however the PBOC still cut the 1-year medium term lending facility rate from 2.95% to 2.85%. Read more

Central banks coming back into focus after slow January start

Central banks coming back into focus after slow January start

the theme of monetary policy extends with the Bank of Japan, Norges Bank and the CBRT set to announce their latest decisions. All three are expected to keep policy on hold, however language from policymakers will be key to any potential volatility in the marketplace. Read more

Dollar downside viewed ahead of expected contraction in US retail sales

Dollar downside viewed ahead of expected contraction in US retail sales

For today’s calendar, markets turn to US retail sales for December at 13:30 GMT, where a contraction of 0.1% MoM is expected. A negative print in the data will likely spark further dollar downside as the hawkish Fed pricing looks to have run its course so far in markets. Read more

UK economy finally recovers to above pre-pandemic levels of output

UK economy finally recovers to above pre-pandemic levels of output

This morning’s release of UK GDP data for November saw economic activity more than double the consensus estimate with a print of 0.9% MoM. In addition to this, October’s monthly GDP reading was revised upwards from 0.1% to 0.2%. Read more

Dollar declines following December CPI, Brainard’s hearing up next

Dollar declines following December CPI, Brainard’s hearing up next

If you were to predict the market reaction to a near 40-year high US CPI print of 7% ahead of time, chances are you wouldn’t have guessed yesterday’s outcome correctly across all markets. Read more

Monex’s 12 key market themes for 2022

Monex’s 12 key market themes for 2022

Trade ideas tend to have a short shelflife in today's market, so instead of issuing trade suggestions for 2022, we have opted to outline the main themes we think will dominate market price action in the coming 12 months. Read more

US inflation near 40-year high, but financial markets are underwhelmed

US inflation near 40-year high, but financial markets are underwhelmed

Despite the US CPI release showed that headline inflation is sitting at its highest point since June 1982, the reaction in the Treasury market was counterintuitive and the dollar sold-off against its G10 peers. Read more

Dollar dampened by Powell’s reluctance to turn more explicitly hawkish

Dollar dampened by Powell’s reluctance to turn more explicitly hawkish

Selling pressure hit the greenback following Powell’s appearance in front of the Senate banking committee and continued overnight ahead of today’s release of December’s CPI data for the US, pushing the DXY index down to its lowest point since November 30th. Read more

Dollar bid fades as equity markets stabilise, Powell could reignite bond market turmoil

Dollar bid fades as equity markets stabilise, Powell could reignite bond market turmoil

Beyond tackling inflation and discussing the speed of the labour market recovery, Powell is expected to speak on climate change, banking regulation, and the trading scandal that saw Vice Chair Clarida resign yesterday a fortnight before his term was due to expire. Read more

Dollar starts to fightback following Friday’s payrolls induced slip

Dollar starts to fightback following Friday’s payrolls induced slip

Outside of economic events, the start of US-Russia discussions in Geneva today will be closely watched as any breakdown in talks could result in harsher economic sanctions and shift the risk environment. Read more

Inflation is back in focus after a week of rising bond yields

Inflation is back in focus after a week of rising bond yields

Next week (10th - 14th January), inflation data will be the focus and key for market pricing of rates, but it isn’t a given that this will bring about volatility in the FX space. Read more

US and Canadian labour market reactive

US and Canadian labour market reactive

Expectations for today’s US payrolls data were high after multiple sell-side forecasters revised their projections for the net employment figure upwards following the higher ADP and Homebase data from earlier in the week. Read more

FOMC meeting minutes strike hawkish tone, but it’s one for the fixed income traders

FOMC meeting minutes strike hawkish tone, but it’s one for the fixed income traders

It seems today's FOMC meeting minutes is one for the fixed income traders as opposed to the FX space. For FX markets, the impact of today’s meeting minutes will likely play out over the course of the week, especially as December’s jobs data is released on Friday following bumper ADP and Homebase indicators earlier in the week. Read more

US Payrolls data to define the next leg for the dollar after hawkish Fed minutes

US Payrolls data to define the next leg for the dollar after hawkish Fed minutes

The US dollar has been hovering within recent ranges since yesterday as markets await December’s payrolls data which is scheduled for release this afternoon at 13:30 GMT. The data comes after a strong ADP print which beat even the highest forecast, and minutes of the FOMC which showed that maximum employment is within reach while the strong economic recovery and higher inflation could mean interest rate hikes would come earlier and faster. Read more

G10 FX markets finally wake up to the hawkish Fed minutes

G10 FX markets finally wake up to the hawkish Fed minutes

US Treasury yields had been rising for the majority of the week as market participants developed higher expectations for inflation and policy normalisation ahead of yesterday’s release of the FOMC meeting minutes. The release of the meeting minutes did not disappoint and caused more carnage in equity and fixed income markets as the hawkish expectations were confirmed. Read more

All eyes on FOMC minutes as Treasuries rebound

All eyes on FOMC minutes as Treasuries rebound

The US dollar rallied in yesterday’s session following surging US Treasury bond yields on Tuesday but retraced some of its gains after mixed Omicron headlines and ahead of tonight’s release of the FOMC meeting minutes. Read more

EUR and JPY take on water as US Treasury yields look to return to pre-pandemic levels

EUR and JPY take on water as US Treasury yields look to return to pre-pandemic levels

The fall in the euro can most likely be attributed to jumps in the US 2Y and 10Y yield more so than domestic headlines given the euro’s sensitivity to yield differentials. For the same reason, JPY dropped to a 4-year low against the US dollar in yesterday’s session. Read more

Liquidity conditions normalise while markets get ready for US Nonfarms

Liquidity conditions normalise while markets get ready for US Nonfarms

Virus conditions will be watched throughout the first half of the week while on Friday, markets turn to the Nonfarm Payrolls report which could support the dollar further if the release reflects stronger underlying growth momentum domestically amid global worries around Covid.  Read more

Monex January 2022 FX Forecasts

Monex January 2022 FX Forecasts

Looking ahead to 2022, our forecasts have been adjusted to take into account the new sensitivities of central banks to inflation, continuing virus risks and the likely slowdown in growth in Q1. Omicron risk continues to dominate as policymakers conduct a balancing act in order to mitigate the health and economic impacts. Read more

Dollar declines as liquidity disappears with Christmas rapidly approaching

Dollar declines as liquidity disappears with Christmas rapidly approaching

The dollar weakened further across the board in yesterday’s session as the risk on mood in markets extended following more optimistic Covid headlines while equities surged, with the S&P 500 hitting another all-time high. Read more

FX markets look past second-tier data amid holiday-thinned trading

FX markets look past second-tier data amid holiday-thinned trading

The pound was one of the main beneficiaries of the broad USD weakness in yesterday’s session as the currency rose 0.65% open-to-close against the dollar and 0.31% against the euro. Read more

Markets start to dull down as data calendar dries up

Markets start to dull down as data calendar dries up

The broad dollar sat under pressure for the first time this week in yesterday’s trading session as market risk sentiment was better supported, however, the DXY index is yet to show a material step down due to the greenback’s rally against the Japanese yen yesterday. Read more

Turkish lira captivates markets after rallying over 28% from its lows

Turkish lira captivates markets after rallying over 28% from its lows

Events in Turkey yesterday had esteemed EM currency traders gobsmacked as the lira went from 12% down on the day against the dollar to rallying over 28% from its trough upon closing. Read more

Dollar bid reignites amid health concerns despite Biden’s spending package going up in smoke

Dollar bid reignites amid health concerns despite Biden’s spending package going up in smoke

The dollar starts this week bid across most G10 pairs as risk-off conditions dominate yet again amid concerns over economically damaging containment conditions being rolled out in response to the rise in cases brought about by the Omicron variant. Read more

Winding down for Christmas, yeah

Winding down for Christmas, yeah

Next week (20th - 24th December), despite the odd pieces of data set for release, economic events are unlikely to be too market moving with liquidity set to dry up as traders trim positions heading into year-end. Read more

CBR continues hiking as planned, ruble remains unfazed

CBR continues hiking as planned, ruble remains unfazed

The CBR's decision to go ahead with the 100bps hike to increase the key rate to 8.50% provided some upside to the ruble, but gains were limited as this was largely expected by markets and risks around stricter sanctions linger.  Read more

Euro takes joy in ECB decision despite the modest bridge between PEPP and APP

Euro takes joy in ECB decision despite the modest bridge between PEPP and APP

The ECB decided on a monthly net purchase pace of €40bn in Q2 and €30bn in Q3 under APP before the more traditional QE vehicle resets at a pace of €20bn from Q4 onwards. Read more

Bank of England gives way to inflationary pressure and hikes rates by 15bps

Bank of England gives way to inflationary pressure and hikes rates by 15bps

The Bank of England surprised market participants today by voting 8-1 to raise rates by 15bps to 0.25%, and has effectively announced the start of their hiking cycle in spite of the growth risks. Read more

Troubled times for the Turkish lira heading into 2022

Troubled times for the Turkish lira heading into 2022

The CBRT cut the one-week repo rate by a further 100bps this morning, bringing the policy rate down to 14%, which was largely expected by market participants. Read more

Norges Bank goes ahead with second rate hike despite emergence of Omicron

Norges Bank goes ahead with second rate hike despite emergence of Omicron

The Norges Bank upheld its hawkish reputation within the DM space today by going ahead with a second 25bps rate hike to bring the deposit rate to 0.50%. Read more

Fed’s sensitivity to inflation overshoot begins to show as 3 rate hikes signalled next year

Fed’s sensitivity to inflation overshoot begins to show as 3 rate hikes signalled next year

The shock delivered by today’s Federal Reserve decision came in the form of the dot plot, which now foresees 3 rate hikes in 2022, up from just half a rate hike signalled in September’s projections. Read more

UK labour market shows limited impact of furlough expiry but data does little for markets as BoE hamstrung by Omicron 

UK labour market shows limited impact of furlough expiry but data does little for markets as BoE hamstrung by Omicron 

Despite concerns of a disruptive removal of fiscal support, today’s UK employment data shows a fairly smooth impact of the end of the furlough scheme. The unemployment rate declined from 4.3% to 4.2% in the 3-months up until October. Read more

Bank of Canada formalises its implicit employment goal in new inflation mandate

Bank of Canada formalises its implicit employment goal in new inflation mandate

While today’s announcement falls in line with what economists were largely expecting and is merely a formalisation of the mandate that has been in practice since the onset of the pandemic, it is being viewed as a marginal dovish development by markets. Read more

Omicroncerns clouding the monetary outlook ahead of year end

Omicroncerns clouding the monetary outlook ahead of year end

Next week’s (13th - 17th December) calendar includes nine central banks scheduled to announce their policy decisions, which means FX volatility is likely to pick up. All of which are likely to be clouded by concerns over the impact of the Omicron variant.  Read more

National Bank of Poland continues hiking cycle despite virus uncertainties

National Bank of Poland continues hiking cycle despite virus uncertainties

The National Bank of Poland’s decision to hike interest rates by another 50bps today came as no surprise to markets as the central bank had been very clear in its messaging that inflation will be at the top of the agenda in the near-term. Read more

Bank of Canada flags desire to hike rates, but growth risks keep them noncommittal

Bank of Canada flags desire to hike rates, but growth risks keep them noncommittal

CAD mildly weakend on the back of the release as there was no material upgrade to the Bank’s October projections in the statement. However, the brief spike in USDCAD after the announcement was quickly retraced. Read more

BoC and NBP to keep markets busy ahead of US CPI

BoC and NBP to keep markets busy ahead of US CPI

Next week’s (6th - 10th December) calendar includes a BoC meeting and an NBP meeting, along with several CPI releases including the US. While the BoC is expected to hold fire on Wednesday, Thursday’s speech from BoC Deputy Governor Gravelle will be heavily watched. Read more

Diverging labour market progress in US and Canada brings back volatility in FX markets

Diverging labour market progress in US and Canada brings back volatility in FX markets

Volatility in FX markets after the US and Canada jobs reports made up for the lack of price action in the first part of the day. CAD strengthened to session highs on the back of the data, while USD saw opposite moves. Read more

Monex December 2021 FX Forecasts

Monex December 2021 FX Forecasts

The Omicron variant has certainly thrown another spanner in the works for our currency forecasts. With little information known about the efficacy rate of vaccines against the Omicron variant and therefore the impact it will have on global growth, we project our near-term forecasts based on the scenario of no substantial deterioration in Covid conditions towards year-end. Read more

Omicron arrival in the US spooks markets to reignite haven bid

Omicron arrival in the US spooks markets to reignite haven bid

The dollar split the G10 currency board in half again for the most part of yesterday’s session, as risk assets enjoyed an overdue boost given that no news on the Omicron variant was seen as good news. Read more

Upside in Canadian GDP unlikely to change Bank of Canada’s course

Upside in Canadian GDP unlikely to change Bank of Canada’s course

With growth still printing closer to the BoC’s expectations in Q3 than initially thought following August’s preliminary reading, and the preliminary reading for October showing a pick-up in sequential activity to 0.8% MoM, the report was positive on the whole. Read more

Covid concerns re-emerge, payrolls data pivotal for December Fed

Covid concerns re-emerge, payrolls data pivotal for December Fed

Next week's focus largely sits on Friday’s Nonfarm payrolls data. Outside of economic data, news about the spread, transmissibility and reduced vaccine efficacy of the new Covid strain from South Africa will prove highly influential for market risk appetite. Read more

Lower growth profile and rising US yields call for downgraded EUR calls

Lower growth profile and rising US yields call for downgraded EUR calls

In November, significant downside risks to our November forecasts materialised, with growth concerns and rising US yields pushing EURUSD down from 1.16 to the 1.12 level. Growth concerns arose as some eurozone countries went into light lockdowns. Read more

Krona rallies as Riksbank flags earlier rate hike

Krona rallies as Riksbank flags earlier rate hike

The sole focus of today’s Riksbank decision was on the rate projections and QE purchases going forward, as markets had widely expected the central bank to keep policy unchanged in today’s meeting. Read more

Dollar drives higher ahead of Thanksgiving break

Dollar drives higher ahead of Thanksgiving break

The dollar was on a surge again in yesterday’s session as markets received a deluge of US data before today’s Thanksgiving holiday, where US markets are closed for the day. Data out from yesterday saw US initial jobless claims fall to their lowest level since 1969. Read more

November flash PMI beat fails to invigorate pound like it did the euro 

November flash PMI beat fails to invigorate pound like it did the euro 

Following on from this morning’s eurozone PMI beat and the subsequent EURUSD rally, all eyes rested on the UK flash November PMI data and whether the pound would find a similar tailwind. Read more

Euro continues to fall as further lockdowns eyed

Euro continues to fall as further lockdowns eyed

The single currency remains in what can only be described as freefall against the dollar and other G10 currencies this morning following last week’s slump. Markets await news from Germany and France about how they will counter the latest rise in Covid cases.  Read more

Projected rate paths are key for NZD and SEK

Projected rate paths are key for NZD and SEK

Next week (22nd - 26th November), focus remains on how markets price central bank tolerances to inflation and global growth conditions as Covid cases begin to rise and force major nations to impose tighter containment measures. Read more

CBRT throws market a bone but pressure remains on the lira 

CBRT throws market a bone but pressure remains on the lira 

The renewed pressure on the lira was due to the terminology around the December forward guidance, which presented a much looser commitment to halting the cutting cycle than headlines suggested. Read more

Canadian CPI meets expectations at a record 4.7% YoY 

Canadian CPI meets expectations at a record 4.7% YoY 

Today’s CPI release for October saw headline print at 4.7% YoY in October, up from 4.4% in September and in line with the consensus expectation. This marks a 0.7% MoM NSA growth in prices in October, while the average of the core measures held steady at 2.67%. Read more

UK CPI, labour market data keep BoE on track for December hike

UK CPI, labour market data keep BoE on track for December hike

UK CPI massively outstriped expectations to print at its highest 12-month rate since December 2011, and the month-on-month change saw the pace of price increases reach a high not seen since April 1993. While today’s data exceeded the consensus estimate from economists, it is broadly in line with the BoE’s projections, which envisage CPI peaking at 5% in April 2022 when Ofgem adjusts its price cap again. Read more

EURUSD reaches 16-month lows amid US rates and renewed restrictions

EURUSD reaches 16-month lows amid US rates and renewed restrictions

After the euro fell to a 16-month low against the dollar during the latter part of yesterday’s trading session due to a steepening in the US yield curve, the pair continued to tumble this morning as renewed Covid restrictions in European countries and headlines around the Nord Stream 2 pipeline threaten growth conditions in the bloc. Read more

UK labour market: First paving stone laid for the path to a December rate hike 

UK labour market: First paving stone laid for the path to a December rate hike 

While the latest labour market report doesn’t highlight the full impact of furlough schemes expiry on the labour market, the data is strong across a variety of lagged and real-time metrics and therefore highlights a robust labour market heading into the transition period. In the quarter up until September, 247,000 jobs were added, driven by a record high net flow from unemployment to employment, while 213,000 of those jobs were added in September alone. Read more

DXY takes another leg higher as EUR and JPY sell-off from higher rates 

DXY takes another leg higher as EUR and JPY sell-off from higher rates 

While the dollar saw modest broad-based strength yesterday afternoon, losses among the G10 were most prominent in the euro given the currency’s sensitivity to the steepening of the US Treasury curve. This led to EURUSD falling to fresh 16-month lows while losses among other G10 peers were much more limited. Read more

GBP Outlook: Waiting for the break in the clouds

GBP Outlook: Waiting for the break in the clouds

With GBPUSD trading some distance from our 1-month target of 1.38, we have downgraded our end of month call to 1.3550 while maintaining our end of year call at 1.38. Our bullish medium-term GBP view remains on track despite the near-term hurdles for a number of reasons. Read more

Renewed restrictions in Europe cloud near-term outlook

Renewed restrictions in Europe cloud near-term outlook

EURUSD has been trading in tight ranges since Friday but remains on the weak side following the wave of USD strength since the US CPI inflation release. In the bloc itself, the near-term growth outlook may also be dampened by renewed Covid restrictions despite the European Commission having upgraded 2021 growth just last week. Read more

US CPI keeps markets volatile following the central bank bonanza

US CPI keeps markets volatile following the central bank bonanza

Next week (15th - 19th November), CPI remains top of mind as a number of nations are set to release reports highlighting above target price growth, however, we believe these releases will have less of an impact on broader markets relative to the US release this week. Additionally, central banks from South Africa and Turkey are expected to deliver fresh rate decisions.  Read more

US bond markets in focus as they reopen following Veterans Day 

US bond markets in focus as they reopen following Veterans Day 

Yesterday’s dollar action was relatively muted with the US equity and bond markets among others enjoying a bank holiday after Wednesday’s tumultuous session. The DXY index continued to strengthen this morning and reached a fresh 15-month high as policy expectations from the Fed remain high. Read more

RUB: Positive outlook riddled with risk

RUB: Positive outlook riddled with risk

While most arrows point in favour of a RUB rally, a major downside risk to the currency outlook has emerged as the Covid case count, along with related deaths and hospitalisations, stand at record-highs and first steps have been taken to slow the surge. Read more

Markets shaken by strong US CPI print while policy expectations grow

Markets shaken by strong US CPI print while policy expectations grow

Markets were hit by a bout of USD strength in yesterday’s session after CPI inflation printed to the upside, igniting further inflation fears globally and expectations of policy tightening by the Fed. October’s core CPI rose by 0.60% MoM, 0.2pp above expectations, while the YoY rate jumped to 4.6%. The annual headline figure rose to 6.3% YoY, the highest inflation reading since November 1990. Read more

US inflation tracks back above 6%, placing pressure on transitory messaging 

US inflation tracks back above 6%, placing pressure on transitory messaging 

With expectations for October’s CPI print to rise from 5.4% to 5.9% YoY already in play, today’s inflation release had to be big to disrupt markets beyond what had already been priced into the Treasury curve and in the FX space during the morning session. Read more

All eyes are on US rate pricing on CPI day

All eyes are on US rate pricing on CPI day

With this week’s economic calendar being rather sparse for most of the G10 countries, all focus will be on today’s US consumer price data which will likely show an acceleration in October. CPI is expected to rise 5.9% YoY and 0.6% MoM, while core inflation is set to climb 0.4% MoM. Read more

Fed events keep the headlines rolling in a light data day 

Fed events keep the headlines rolling in a light data day 

The dollar continued to pare back gains in yesterday’s session after Friday’s strong jobs report from the US. An empty data calendar was offset by several Fed speeches, although no new information was shared. Fed President Charles Evans, who is a voting member, does not think a rate hike is appropriate until 2023 and stated officials have time to be patient. Read more

Flurry of central bank speakers to lead markets today

Flurry of central bank speakers to lead markets today

This week, the focus is going to be very much on central bank commentary following the string of exciting central bank meetings, with Governor Bailey first up at the BoE at 17:00 GMT today. The Governor is set to speak at a citizens’ forum Q&A, where questioning is likely to focus on the Bank’s recent communication and its credibility. Read more

ECB and Fed speakers in scope after dovish retaliation

ECB and Fed speakers in scope after dovish retaliation

Next week (8th - 12th November), despite the absence of any major central bank meetings, the focus will remain on monetary policy pricing, especially as the Fed’s media blackout period ends. Notable speeches from Chicago Fed Evans and San Francisco’s Daly will be in scope for US rate traders, while opening remarks from the ECB’s Chief Economist Lane will be top of mind for euro money markets. Read more

Strong payrolls keep US front-end yields firm, boosting the dollar

Strong payrolls keep US front-end yields firm, boosting the dollar

Amid the dovish pushback from G10 central banks this week and the broad rally in bond markets, front-end US Treasury yields have remained fairly resilient. This theme was extended in early trading today, helping the dollar gain ground ahead of October’s payroll data. While Canada’s net employment change undershot expectations by 10.4k with a print of 31.2k, today's LFS largely met our expectations. Read more

Sterling tumbles as BoE pushes back on market expectations 

Sterling tumbles as BoE pushes back on market expectations 

It was a big day for sterling traders yesterday as GBPUSD fell 1.37% over the course of the session as hawkish Bank of England bets were unwound after the central bank held rates at 0.1% by a wide margin of 7-2. The decision to hold rates wasn’t the only dovish aspect of yesterday’s announcement, as the Bank also pushed back on market pricing of the Bank Rate hitting 1% by the end of 2022 via its forecasts Read more

Bank of England bats back market expectations, sends sterling plummeting 

Bank of England bats back market expectations, sends sterling plummeting 

The Bank of England today shocked markets by voting 7-2 to hold rates at 0.1% while voting 6-3 to maintain the current stock of assets at £875bn. While we largely expected the Bank to hit back against aggressive market pricing of rate hikes by holding rates, we anticipated a tighter split in the vote in order to signal to markets that tighter policy was imminent at December’s meeting.  Read more

Markets turn a blind eye to Fed and ECB guidance, BoE up next

Markets turn a blind eye to Fed and ECB guidance, BoE up next

To hike, or not to hike, that is the question. While money markets favour a 15bp interest rate hike from the Bank of England today at 12:00 GMT, we tend to disagree and believe the latest commentary by policymakers has done the dirty work of anchoring inflation expectations for the time being. Bloomberg Economics expects policy makers to hold rates with a 5-4 vote, shifting the onus to the December meeting for the first hike. Read more

Time to taper, but that is all from the Fed for now

Time to taper, but that is all from the Fed for now

The Federal Reserve largely met the market consensus today by announcing plans to taper its QE programme by a maximum of $15bn per month until year-end. Powell opened the door further to give policymakers greater optionality going forward. Read more

NBP: Hawkish déjà vu following inflation spike

NBP: Hawkish déjà vu following inflation spike

The Polish zloty found support in today’s decision by the National Bank of Poland to increase its policy rate by 75bps to reach a level of 1.25%, slightly below its pre-covid rate of 1.50%, as this caught markets off guard again after October’s unexpected 40bp hike. Read more

NOK and SEK to rise further before rally tops out

NOK and SEK to rise further before rally tops out

Looking ahead, we expect both NOK and SEK to remain strong until year-end, but next year could see more limited gains as the procyclical rally is expected to be less pronounced than previously thought given downgrades to global growth. Read more

It’s time to taper, but could more be in store? 

It’s time to taper, but could more be in store? 

Today, it will be much the same in regards to the dollar calling the markets' tune as investors prepare for tonight’s Federal Reserve meeting at the earlier time of 18:00 GMT due to clock changes. While the focus of the meeting is largely known, that is QE tapering, there remains some ambiguities around the Fed’s pace of tapering and the sequencing of normalisation. Read more

Monex November 2021 FX Forecasts

Monex November 2021 FX Forecasts

Concerns over Europe’s stagflationary environment in September reverberated through global markets last month, albeit on an inflationary front as opposed to stagnant growth This resulted in money markets continually pushing back against G10 central bank communications to price in aggressive tightening cycles across the space as a whole, while bear flattening occurred in most sovereign yield curves. Read more

Bond markets continue to call the tune for FX markets with key rate decisions due

Bond markets continue to call the tune for FX markets with key rate decisions due

It has all been about bond yields again in FX markets, with the dollar initially trading on the front foot in yesterday’s trading session before retracing early gains as Treasury yields moderated across the entirety of the curve. The greenback’s losses were largest against risk currencies within the G10 space, while ground was still claimed against GBP and JPY. Today, the dollar looks to have bounced. Read more

Friday’s robust reversal puts markets on edge ahead of central bank meetings

Friday’s robust reversal puts markets on edge ahead of central bank meetings

All eyes within the FX space sit on sterling this week as a pivotal Bank of England meeting is scheduled for Thursday. Following hawkish commentary from Governor Bailey over the past month or so, money markets have upped the ante on the likelihood of the Bank raising rates this month. Read more

The central bank magic trick: turning a dove into a hawk in plain sight

The central bank magic trick: turning a dove into a hawk in plain sight

Price action in G10 FX markets this week has been driven predominantly by pricing in bond markets and the actions of central banks. This dynamic is set to continue next week (1st - 5th November) as the battle against rising inflation migrates from the Bank of Canada and the ECB  to the Reserve Bank of Australia, the Federal Reserve, and the Bank of England. Read more

EURUSD rallies close to 1.17 mark as front-end yield spreads narrow

EURUSD rallies close to 1.17 mark as front-end yield spreads narrow

It was all about the euro in FX markets yesterday as President Lagarde failed to push back expectations of rate hikes in 2022, something her predecessor would have seemingly done. When asked about the 20bp rate hike baked into swaps that expire at the end of next year and whether it was reflective of the ECB’s policy stance, Lagarde stated that it wasn’t in line with the ECB’s view but that it was also not for her to say whether this should be adjusted or not. Read more

ECB meeting: Inflation, inflation, inflation

ECB meeting: Inflation, inflation, inflation

Despite the suppressed expectations, the ECB managed to dull the event down even further by adjusting their opening statement such that it indicates the decision would not include an assessment of the economic outlook. The lack of excitement was visible across markets, as EURUSD remained unfazed after the release of the initial rate statement. Read more

ECB takes to the stage after blockbuster Bank of Canada meeting yesterday

ECB takes to the stage after blockbuster Bank of Canada meeting yesterday

Ahead of today’s European Central Bank meeting, EURUSD traders have been positioning themselves within tight ranges despite our expectation that the monetary policy meeting is unlikely to be too instrumental for the pair. Read more

Bank of Canada ends QE and emboldens hawkish market pricing

Bank of Canada ends QE and emboldens hawkish market pricing

The Bank of Canada today announced that it would taper its QE programme by a further C$1bn a week, therefore entering the reinvestment stage, while it also brought forward its forecast for the output gap closing from H2 2022 to “the middle quarters” of next year. Read more

UK budget: Sunak saves part of the fiscal windfall with 2024 election in mind

UK budget: Sunak saves part of the fiscal windfall with 2024 election in mind

Today’s long awaited Autumn budget was a damp squib for FX markets given that the majority of the fiscal pledges were announced in advance of the formal unveiling. The net impact of today’s budget is lower bond issuance going forward, with the OBR now projecting £154bn less in borrowing over the following 5-years. Read more

Fiscal windfall unlikely to unlock an expansionary budget in the UK

Fiscal windfall unlikely to unlock an expansionary budget in the UK

Today, the pound remains trading in tight ranges as a key fiscal event, the Autumn budget, is on the horizon. Shortly after midday, Rishi Sunak, the Chancellor of the Exchequer, is expected to outline a more conservative fiscal package with much of the recently reported spending paid for by the recent fiscal windfall. Read more

Rate differentials shine through a light data calendar

Rate differentials shine through a light data calendar

In what was a limited data calendar yesterday, the pound trod water against the dollar while making further inroads against the single currency. All eyes remain on Wednesday’s budget, with headlines yesterday suggesting that an increase in the national living wage to £9.50 per hour and £6bn in extra funding for the NHS were in store. Read more

GDP and inflation data set to test stagflation fears

GDP and inflation data set to test stagflation fears

This week, the focus for the eurozone will remain on supply disruptions and access to energy, but will also be shared with the latest monetary policy update from the European Central Bank and the advanced readings for Q3 GDP and October’s inflation. The combination of the three economic events and the current economic backdrop will likely increase volatility in EURUSD this week. Read more

Central banks to take centre stage ahead of crucial GDP readings

Central banks to take centre stage ahead of crucial GDP readings

A flurry of central bank meetings take will place across the globe next week (25th - 29th October), while Q3 GDP prints from the US and eurozone will take centre stage on Friday. Several countries will also release inflation readings. Among the central bank meetings are the Bank of Canada, the Bank of Japan and the European Central Bank - in order of importance. Read more

Big miss in UK retail sales adds to signs of slowing recovery 

Big miss in UK retail sales adds to signs of slowing recovery 

This morning’s price action is more muted despite the big miss in September retail sales. YoY sales including auto fuel dropped by 1.3% vs the consensus of a 0.4% contraction, while excluding fuel, the figure decreased 2.6% vs -1.6% expected. Monthly sales including auto fuel was set to rise with 0.6% but instead fell by 0.2%. Read more

Pain felt across Turkish assets as CBRT throws in 200bp rate cut

Pain felt across Turkish assets as CBRT throws in 200bp rate cut

When the CBRT announced another 200bp rate cut on top of that today, while inflation is near 20%, the lira lost it and USDTRY spiked to 9.48 up from 9.25. Going into the event, risks to the consensus of a 50bp rate cut were always tilted to the upside as some sell-side analysts were anticipating a 100bp cut. Read more

All eyes on EU summit and CBRT decision 

All eyes on EU summit and CBRT decision 

The euro is in wait-and-see mode, broadly following US dollar moves while markets await the two-day EU summit in Brussels that starts today. EU leaders will discuss their response to the recent surges in energy prices as they stated Brussels would look into longer-term options to address the price shocks. Read more

Inflation on markets’ lips ahead of CPI releases

Inflation on markets’ lips ahead of CPI releases

While the pound broadly followed USD moves overnight and this morning, the UK CPI inflation release which printed just below expectations, both MoM and YoY, led to additional weakness in the pound to reach fresh daily lows. The data was the last reading before the Bank of England’s November decision on policy rates. Read more

15bp hike not enough for a happy HUF

15bp hike not enough for a happy HUF

The National Bank of Hungary raised its base rate by another 15bps today to reach 1.80%, as expected, but the Hungarian Forint still weakened against the US dollar following the announcement. Going into the event, odds for a more aggressive hike than the consensus of 15bps were elevated given the board’s sensitivity to rising inflationary pressures, arguably explaining the move in HUF upon the announcement. Read more

Risk-on currencies leading the way as dollar weakens

Risk-on currencies leading the way as dollar weakens

Firmer risk sentiment reduced demand for the dollar overnight and led to the DXY index retreating to its lowest levels in two weeks while yields also moderated. Yesterday’s data docket included a contraction of industrial production by 1.3% in September, though the press release that accompanied the report indicated this was mostly due to Hurricane Ida and the sharp decline in auto production. Read more

EUR Update: Euro weighed down by near-term factors, medium-term outlook rosier

EUR Update: Euro weighed down by near-term factors, medium-term outlook rosier

While September’s losses were significant at over 2%, we expect the pressure on the euro to ease over the coming months as supply pressures mitigate, which should help to cool inflation and aid growth conditions. We expect the combination of these developments to be supportive for EURUSD. Read more

China growth miss and inflation fears keep USD bid 

China growth miss and inflation fears keep USD bid 

News that China’s Q3 GDP undershot expectations as the country hit its slowest pace of growth in a year helped safe havens stay buoyant this morning while continued concerns around cost pressures and supply chain disruptions kept risk sentiment down. Chinese GDP expanded 4.9% from a year earlier, slowing from 7.9% in the previous quarter. Read more

Economic activity and inflation data put stagflation fears to the test 

Economic activity and inflation data put stagflation fears to the test 

Next week (18th - 22nd October), the data calendar revolves around October’s preliminary PMI prints, while China’s Q3 GDP data also scans as one of the more interesting releases. The focus on activity data is likely to be heightened given growth concerns over previous weeks and the impact higher input costs are having. This is especially the case in the eurozone, UK, and China, where rising energy costs are the most pronounced. Read more

USD Update: Defiant dollar in Q4

USD Update: Defiant dollar in Q4

Our latest forecasts now see the DXY index trading a percentage point lower than current spot levels and back towards highs of its previous trading range as the aggressive repricing in FX markets overextended in early October given our views on back-end US rates this year. Read more

Dollar downside is the driving dynamic towards the end of the week 

Dollar downside is the driving dynamic towards the end of the week 

A beat in reported US company earnings and a flattening of the yield curve helped boost risk sentiment in yesterday’s market, leaving the dollar nearly a tenth of a percentage point lower as measured by the DXY index. Read more

TRY reaches another record low as Erdogan adds CBRT firings to the flame

TRY reaches another record low as Erdogan adds CBRT firings to the flame

The Turkish lira continues to get its teeth kicked in after a series of events over the last weeks pushed USDTRY above the 9.00 handle. The lira’s losses continued this morning as markets awoke to the news of three CBRT members being fired by President Erdogan. Among the three, Deputy governors Semih Tumen and Ugur Namik Kucuk were removed from their positions, along with MPC member Abdullah Yavas. Read more

Big miss in ZEW fails to dent EURUSD as G10 yields moderate

Big miss in ZEW fails to dent EURUSD as G10 yields moderate

Today’s miss in the German ZEW data highlights how German activity is struggling to expand at the start of Q4 as current conditions are no longer improving. The current situation gauge tumbled from 31.9 in September to 21.6 in October, well below expectations of 28.5. EURUSD escaped the lack of optimism spilling into FX markets despite the big miss in today’s ZEW data, as at the same time yields in G10 markets have been moderating today after yesterday’s dramatic climb higher. Read more

Macro backdrop of slower growth and rising inflation set to dominate FX markets

Macro backdrop of slower growth and rising inflation set to dominate FX markets

Next week (11th - 15th October), with a limited data calendar, markets are likely to continue focusing on the inflation backdrop and the impact it will have on growth conditions. We take a brief look at the environment in Europe this week and what it means for ECB and BoE pricing. Read more

Diverging labour reports play out in North America

Diverging labour reports play out in North America

It was our expectation that today’s Canadian and US labour market reports would show a stark divergence, not only in net employment but also in underlying metrics. This ultimately played out, with the US jobs market adding 194k jobs in September compared with expectations of a 500k increase, while Canada added 157.1k jobs relative to expectations of just a 60k net employment gain. Read more

National Bank of Poland’s unexpected rate hike takes markets by surprise

National Bank of Poland’s unexpected rate hike takes markets by surprise

Out of the 29 estimates submitted to Bloomberg, none expected today’s National Bank of Poland meeting to include any changes in policy. The same goes for markets, with implied interest rates envisaging no change in today’s interest rate. Read more

Grappling with the stagflationary backdrop

Grappling with the stagflationary backdrop

Next week (4th - 8th October), the central banks’ assessments of the stagflationary environment will be in focus for markets, especially as traders adjust positions following this week’s aggressive price adjustments. Read more

Monex October 2021 FX Forecasts

Monex October 2021 FX Forecasts

In October, global macro conditions are set to maintain a trepid tone in markets over the short-term, especially with key events such as the US debt ceiling penciled in. We expect this to keep the dollar on a firm footing over the 1-month horizon, but deem the current adjustment by FX markets to be too aggressive to be sustainable. Read more

KRW Update: Further won weakness to be limited

KRW Update: Further won weakness to be limited

A combination of slowing semiconductor exports, higher yields in the DM space, and a resurgence of Covid-19, have all contributed to the unwind in aggressive USDKRW short positioning this year. Read more

From policy announcements to central bank speakers

From policy announcements to central bank speakers

Next week (27th September - 1st October), the focus quickly shifts from policy announcements to individual central bankers as a swathe of speakers fill the economic calendar, largely due to the ECB’s forum on central banking taking place between the 28th and 29th of September. Rather than being in Sintra (Portugal) as has been customary, the event will take place online. Read more

Bank of England delivers hawkish surprise, even by the markets standard 

Bank of England delivers hawkish surprise, even by the markets standard 

The Bank of England today voted unanimously to keep the Bank Rate at 0.1%, while members voted 7-2 in favour of continuing with its existing QE programme. The shift in the QE vote, from 7-1 to 7-2 due to Ramsden joining Saunders in dissenting, set the tone for what was to be a hawkish set of meeting minutes despite their Q3 GDP projection being downgraded by around a percentage point. Read more

Lira falls to record lows after concerning CBRT decision

Lira falls to record lows after concerning CBRT decision

Today’s decision is a large concern for the CBRT’s credibility, and the lira’s price action is telling of this. The currency tumbled to record lows against the US dollar while keeping just under the 9.00 handle, although the pair looks vulnerable with the 9 level being the next breakthrough in the coming weeks. Read more

Liftoff from the Norges Bank comes in a package deal with revised rate path 

Liftoff from the Norges Bank comes in a package deal with revised rate path 

The krone advanced to its strongest level since the Norges Bank’s June meeting, although the bulk of the EURNOK move occurred prior to the meeting as markets were pricing in a hawkish decision to start with. Read more

Fed signals faster tapering in 2023 but under-delivers on next year’s dot plot

Fed signals faster tapering in 2023 but under-delivers on next year’s dot plot

For those looking for an explosive Fed meeting, they may have initially been disappointed by the alterations in the dot plot. However, Powell’s comments meant volatility wasn’t absent in the FX space, with the likes of EURUSD swinging within a 0.55% range and USDJPY climbing over half a per cent higher on the day.  Read more

Canada 2021 election: staying the course

Canada 2021 election: staying the course

Leading media outlets, such as CBC News, have called the 2021 election in favour of the incumbent Liberal Party. However, against his best wishes, Justin Trudeau's election gambit didn't pay off, with the Liberals expected to remain the largest party in Parliament but with a minority government. Current projections have the Liberals elected and leading in 158 seats, just 12 seats shy of an outright majority. Read more

Central bank bonanza

Central bank bonanza

The 20th - 24th September is packed with central bank meetings, with the FOMC’s decision on Wednesday eyed as the most important economic event by markets. On top of that, the Bank of England is set to release their latest policy decision, while the Norges Bank is expected to be the first G10 central bank to raise rates since the pandemic. Read more

CE3 Update: Inflation is running hot, but the NBP appears fireproof

CE3 Update: Inflation is running hot, but the NBP appears fireproof

As inflation concerns intensified over the course of the last two quarters, many central banks in the EM space were forced to hike their interest rates in order to prevent their currencies from selling off and to mitigate further price pressures. The effects were visible in the currencies of Hungary and the Czech Republic, which managed to steer away from weakening against the euro and dollar since March this year. Read more

UK inflation jumps to highs not seen since 2012, putting floor underneath GBP 

UK inflation jumps to highs not seen since 2012, putting floor underneath GBP 

This morning’s CPI data saw headline inflation rise from 2% in July to 3.2% in August, above expectations of an increase to 2.9%, while the core measure also rose substantially from 1.8% to 3.1%. On a monthly basis, which removes favourable base effects, inflation showed rapid sequential growth. Read more

Antipodean update: light at the end of the tunnel, but risks remain elevated

Antipodean update: light at the end of the tunnel, but risks remain elevated

Our Monex analysts expect NZD to outperform in the short-run due to diverging monetary policy with Australia, however, a more stable macro backdrop in February 2022 should enable the RBA to start ramping up its normalisation cycle and thus AUD should benefit from a delayed tailwind. Read more

Inflation to sit top of mind next week

Inflation to sit top of mind next week

Next week’s data calendar focuses heavily on inflation data in major developed market economies, while core CPI readings from Poland and inflation expectations data in Turkey will be viewed amid historically high CPI readings. Read more

Another bumper jobs figure for Canada

Another bumper jobs figure for Canada

Canada’s economy added another 90,200 jobs in August after posting a similarly elevated 94,000 net employment gain in July. This now leaves the overall employment just 0.8% below February 2020 levels, the closest it has been since the pandemic began. The data has compounded positive sentiment around the loonie. Read more

UK economic recovery stalls in July 

UK economic recovery stalls in July 

Data this morning showed that the UK economy expanded at just 0.1% MoM in July, undershooting expectations of a 0.5% expansion and slowing from June’s 1% growth rate. The data not only undershot market economists’ expectations, but also those of the Bank of England. The central bank expects the economy to expand 3% in Q3, but with third quarter growth starting on such a weak base, it looks unlikely that their forecast will be met. Read more

EURUSD mildly ticks up after statement confirms slowdown in PEPP 

EURUSD mildly ticks up after statement confirms slowdown in PEPP 

The euro enjoyed today’s decision by the European Central Bank to reverse engines and moderately slow down net purchases under the Pandemic Emergency Purchase Programme (PEPP), even though this was widely expected by markets as all signs were pointing to slower purchases. Read more

Bank of Canada holds fire but maintains positive outlook

Bank of Canada holds fire but maintains positive outlook

With today’s BoC statement completely following our expectations, our expectations of the normalisation timeline remains intact. We still see the Bank tapering their QE programme by a further C$1bn at October’s meeting, where the idea of delayed growth is likely to be formalised within their latest forecasts, with a final taper pencilled in for December. Read more

Central banks set to stretch hawkish wings 

Central banks set to stretch hawkish wings 

Next week, price action in US fixed income markets will continue to garner a lot of market attention, while increasingly hawkish central bank developments will also be in scope. Of note is the Reserve Bank of Australia, who we expect to press on with tapering their QE programme. Read more

Nonfarms undershoots expectations, confirming previous market pricing

Nonfarms undershoots expectations, confirming previous market pricing

With a total of 235,000 jobs added in August, compared with 1.053m in July, the employment gain undershot expectations by 500,000. While some of the edge was taken off by the July figure being revised up from 943,000 to 1,053m, the lacklustre job growth in August now makes the prospect of the Fed’s median dot signalling a 25bps hike. Read more

Hot hand rand

Hot hand rand

The South African rand has remained a rollercoaster currency over the past few weeks. Having broken above the 15.00 handle for the first time since March to hit a high of 15.39 in late August, the rand is now grabbing market participants’ attention due to its aggressive retracement. Read more

Monex Europe September 2021 FX Forecasts

Monex Europe September 2021 FX Forecasts

We continue to envisage mild US dollar weakness across the G10 but expect volatility to remain abundant as liquidity conditions improve. In September alone, markets will have to contend with elections in both Canada and Germany, a rate hike from Norway, and pivotal central bank meetings in the US and Europe. Read more

Canada’s economy contracts in Q2 as third wave takes its toll

Canada’s economy contracts in Q2 as third wave takes its toll

Canada’s GDP data for June showed the economy expanded 0.7% MoM as provincial lockdown measures were scaled back, but a downward revision for May (-0.3% revised to -0.5%) resulted in the economy contracting in Q2 by 0.3% QoQ. With the economy weathering the tightening of measures relatively well during the third wave and sitting just 1.5% below pre-pandemic levels, today's data is unlikely to unsettle the Bank of Canada. Read more

Powell pushes back expectations at Jackson Hole

Powell pushes back expectations at Jackson Hole

Despite some FOMC members casting hawkish tones to the media over the past 48 hours, Jerome Powell pushed back expectations of policy normalisation in his speech today by not only refraining from announcing the timing of the tapering but also stating that tapering doesn’t signal the timeline for rate hikes. Read more

Softer decline in US Durable Goods Orders underpin US dollar

Softer decline in US Durable Goods Orders underpin US dollar

US Durable Goods Orders fell by less than expected in July, with transportation and defense being the main drag on the figure. Transportation equipment, which was down after two consecutive monthly increases, drove the decrease down by $1.7bn to reach $75.3bn. Read more

UK retail sales fall in July due to transitory factors and Covid concerns

UK retail sales fall in July due to transitory factors and Covid concerns

The release of this morning’s retail sales data for July, which saw sales volumes contract by 2.5% MoM relative to expectations of 0.2% growth, pushed the pound slightly lower against the dollar as it compounds falling consumer confidence metrics and tentative risk sentiment after Covid and growth concerns reappeared in markets during yesterday’s session. Read more

July CPI not enough to move the Bank of Canada

July CPI not enough to move the Bank of Canada

Headline CPI came in hot for July, rising from 3.1% in June to 3.7% YoY, above expectations for a reading of 3.4%. However, despite the headline figure climbing towards the Bank of Canada’s forecasted inflation peak of 3.9%, which they don’t expect to be reached until late Q3, we expect the Bank to maintain its stance that the inflationary overshoot is transitory. Read more

Just a prudent delay by the RBNZ

Just a prudent delay by the RBNZ

The main takeaway from the Reserve Bank of New Zealand's policy meeting was the still hawkish tone struck, signalling that today’s decision was not a change of course in the policy path, but a prudent delay. The RBNZ decision today triggered a knee-jerk downside reaction in the currency, but the Kiwi dollar quickly rebounded to sit higher on the day. Read more

Demand for UK workers remains, but wage pressures moderate

Demand for UK workers remains, but wage pressures moderate

This morning’s headline labour market data for the 3-months heading up to June can be viewed as disappointing, with only 95,000 jobs added in the rolling quarter. Taken on the whole, the labour market data continues to be choppy and show a very murky picture for economists to dissect. Read more

Trudeau calls snap election, loonie unfazed at present

Trudeau calls snap election, loonie unfazed at present

The worst kept secret was finally confirmed over the weekend as Prime Minister Justin Trudeau met with Governor General Mary Simon to dissolve Parliament and set a snap election for September 20th. The announcement of a firm election date over the weekend had a limited impact on financial markets this morning. Read more

Hungarian forint to be anchored by MNB hiking cycle

Hungarian forint to be anchored by MNB hiking cycle

With the external backdrop stabilising somewhat in early August, the July rate hike did cause a reversal in the bearish HUF trend as markets had expected the MNB to hike rates by only 20bps. Given our expectation for inflation to rise further towards year-end, a sustained hiking cycle is set to remain in place from the MNB, which we see as a key driver for a further recovery in the forint. Read more

One week closer to Jackson Hole

One week closer to Jackson Hole

Markets are likely to settle somewhat as they await the headlines from the Jackson Hole symposium on August 27th. Next week’s calendar suggests there may be pockets of isolated volatility with policy decisions from both the Reserve Bank of New Zealand and the Norges Bank, while the Reserve Bank of Australia and Federal Reserve both publish meeting minutes. Read more

CHF Outlook: Renewed Swiss Franc overvaluation is put to the test

CHF Outlook: Renewed Swiss Franc overvaluation is put to the test

The Swiss Franc appreciated sharply over the last five months, with the EURCHF cross sitting near the 1.07 handle in early August, a far cry from the 1.11 handle it was trading at in March. The CHF appreciation resembled the dynamics in 2020, when markets tested the Swiss National Bank's tolerance for a strong currency, with the central bank finally drawing the line at the 1.05 level. Read more

CBRT holds rates, emphasis on Erdogan’s response 

CBRT holds rates, emphasis on Erdogan’s response 

By holding rates at 19%, the CBRT has effectively tried to appease both the President and financial markets. The retention of the line in the statement that rates will be held in positive real territory also keeps the status quo for the lira, however, questions remain over how long the central bank can continue treading water Read more

Miss in core print sends USD lower

Miss in core print sends USD lower

The US dollar rose along with Treasury yields ahead of today’s crucial CPI release as the robust Nonfarms figure from July paved the way for expectations that the Fed may have to take its foot off the gas sooner rather than later. Today’s CPI report showed categories sensitive to reopening moderated, posting their weakest contribution to the MoM gain since March. Read more

To hike or not to hike, that is the question

To hike or not to hike, that is the question

Markets this week have largely focused on underlying growth conditions, FOMC speakers and Friday’s labour market data, with US bond markets sending conflicting signals to FX traders. Next week (9th – 13th August), the key pieces of data centre around rate decisions from Banxico and the CBRT, both of which have reasons to hike rates due to rising inflation but also have grounds to stay pat.  Read more

Canadian employment underperforms, but it isn’t all bad

Canadian employment underperforms, but it isn’t all bad

July’s employment data out of Canada saw the economy add 94,000 jobs. While on the surface, the slip looks seismic, the nature of the job additions and the stage in which the Canadian labour market recovery is at means the underperformance of the net employment data isn’t as concerning as the headline suggests. Read more

Dollar on the offensive as bumper jobs number is delivered

Dollar on the offensive as bumper jobs number is delivered

The labour force participation rate came in at the expected rate of 61.7%, which is a good sign the drop in unemployment is representative of economic conditions, rather than a consequence of people leaving the labour force. Read more

NOK Outlook: NOK rally more subdued with upside now priced in

NOK Outlook: NOK rally more subdued with upside now priced in

The krone has underperformed since as the global economic backdrop deteriorated with the rise of the delta variant, offsetting the impact of the hawkish central bank. This meant NOK became an underperformer of the last couple of months. Read more

Bank of England confirms hawkish disposition

Bank of England confirms hawkish disposition

The Bank of England today confirmed to markets that it was leaning on the hawkish side despite interest rates being held at 0.1% and the split on the decision to maintain the current QE programme sitting on the milder side of 7-1. Read more

GBP Outlook: Staying bullish on the pound over the medium-term

GBP Outlook: Staying bullish on the pound over the medium-term

Headwinds are likely to persist over the coming month as Covid conditions remain volatile. Over the more medium-term, we expect GBPUSD to rally above the 1.40 handle on the basis of a more structural improvement in the growth outlook. Read more

Monex Europe August 2021 FX Forecasts

Monex Europe August 2021 FX Forecasts

With the economic backdrop stabilising somewhat towards the end of July as markets have finally priced in the latest wave of Covid-19 globally, August could arguably be plainer sailing for FX markets, although risks remain. Given the amount of uncertainties that still remain, we expect the dollar to remain broadly firm over the coming month before our expectation of further dollar depreciation plays out over the medium term. Read more

Slip in US Q2 growth rate piles pressure on the dollar

Slip in US Q2 growth rate piles pressure on the dollar

With the dollar already under pressure today as the risk environment stabilises and markets embrace the dovish rhetoric from Fed Chair Powell yesterday, the announcement that the GDP release missed expectations by nearly 2 percentage points put the dollar under the pump some more. Read more

Hawkish rate statement is dialled back by Powell, weighing on the dollar

Hawkish rate statement is dialled back by Powell, weighing on the dollar

The change to today’s rate statement led to a flurry of USD strength across the board which was driven by a spike in front-end yields as markets position for the likely announcement of the tapering timeline at either September or December’s meeting. Read more

Slip in headline CPI trims CAD gains

Slip in headline CPI trims CAD gains

The Canadian dollar has spent much of today’s European session retracing yesterday’s losses as events in China begin to stabilise. However, the release of June’s CPI data has trimmed the loonie’s rally as inflation data begins to moderate and embolden claims that the overshoot is in fact transitory. Read more

EUR Outlook: EURUSD in range bound over summer

EUR Outlook: EURUSD in range bound over summer

The recovery in the euro may hit a hurdle in the next six months as headwinds from policy intensify with both the ECB and Fed decisions set to thrust diverging policy stances back into focus for markets. Read more

Retail sales beat fails to excite CAD

Retail sales beat fails to excite CAD

The release of May’s retail sales data failed to spark any volatility in the USDCAD pair despite the report highlighting a 0.9% beat relative to expectations and a preliminary reading of 4.4% growth in sales in June. Read more

Inflation fears prompt updated forward guidance by CBR

Inflation fears prompt updated forward guidance by CBR

Going into today’s Central Bank of Russia decision, markets knew to expect a significant rate hike, but the question was how large a hike this would be. The Russian ruble found modest support from today’s rate decision, while the lion’s share of the move occurred prior to the announcement. Read more

Sterling weighed down by July PMIs

Sterling weighed down by July PMIs

Sterling has sat firmly at the bottom of the G10 pile this morning with losses exceeding 0.25% against the dollar. While the rest of the G10 has incrementally recovered against the greenback over the course of the morning, sterling’s price action has been sluggish. Read more

ECB makes policy tightening less achievable

ECB makes policy tightening less achievable

In line with the strategy review, the ECB’s statement is arguably net dovish despite the decision including no actual policy changes. Financial markets took the dovish interpretation from the ECB as a positive, with European stock indices holding near intraday highs while EURUSD breaks fresh ground to the upside. Read more

BoC: Markets weigh further C$1bn taper against cautious tone

BoC: Markets weigh further C$1bn taper against cautious tone

Although today’s decision by the Bank of Canada to taper its QE programme by another C$1bn to reach C$2bn per week was widely expected by markets, the market reaction still was significant as the accompanying monetary policy report provided more cues. Read more

Lira unfazed by widely expected CBRT rate decision

Lira unfazed by widely expected CBRT rate decision

The lira held steady in the build-up to the event with little change after the announcement too, as most market participants expected the CBRT to hold rates steady today. Read more

Weathering the storm

Weathering the storm

We have maintained our view of a mild depreciation in the broad dollar over the coming 12-month period, but single out currencies that are likely to buck this broad trend as they are exposed to rising US real yields over this horizon. Read more

ECB raises the bar for normalisation in the short-run, flexibility is the key for policy

ECB raises the bar for normalisation in the short-run, flexibility is the key for policy

Thursday's announcement by the European Central Bank can be perceived as net dovish in the short-term by markets, as the shift from an asymmetric target to a new symmetric 2% inflation target gives the central bank ample room to run accommodative monetary policy for longer without having to fight markets.  Read more

Monetary policy in scope with FOMC minutes and ECB strategy review

Monetary policy in scope with FOMC minutes and ECB strategy review

This week (5th - 9th July), the meeting minutes from the Fed’s June meeting will be scoured by market participants as they try to gain a clearer view on future US interest rates, and the ECB’s Governing Council is set to also meet next week in Frankfurt to discuss the ongoing policy review. Read more

Higher unemployment rate mitigates impact of elevated job gains

Higher unemployment rate mitigates impact of elevated job gains

The lack of movement in the unemployment figures stifled the impact the net employment data had, as it doesn’t map over into emboldening calls for earlier rate hikes and higher US yields. The June employment data thus resulted in a weakening of the US dollar and a moderation in front-end Treasury yields.  Read more

Monex Europe July 2021 FX Forecasts

Monex Europe July 2021 FX Forecasts

The dollar defied our expectations in June after the Federal Reserve surprised with a hawkish outlook on the US economy, signalling two rate hikes as early as 2023. We have adjusted our July forecasts to account for the more sensitive Fed reaction function, but broadly we expect the trend of mild dollar depreciation to continue. Read more

Riksbank stands firm with dovish tone

Riksbank stands firm with dovish tone

The Swedish krona has hovered in narrower ranges in Q2 compared to Q1 2021 as much of the positive incoming data was offset by a clear message from the Riksbank that it will maintain loose monetary policy over the 3-year horizon. Sweden’s resilience to the recent Covid-19 measures and quick recovery prospects should support the Swedish krona going forward. Read more

The rand’s return back to 2019 highs

The rand’s return back to 2019 highs

The improvement in South Africa's economic fundamentals over the course of the last month means we now expect a continuation in the ZAR rally over the 12-month horizon, as opposed to our previous view of mean reversion. We expect USDZAR to continue trading at the current 13.5 levels this month before driving down to levels not seen since January 2019 over the one-year horizon. Read more

Brazilian real leads the EM race against USD

Brazilian real leads the EM race against USD

The Brazilian real has seen a significant rally against the US dollar in Q2, with gains over 13% recorded since the March bottom. The real's surge has taken place despite a grim backdrop of Covid infections throughout the country and a slow pace of vaccinations. Read more

Monex Europe June 2021 FX Forecasts

Monex Europe June 2021 FX Forecasts

Over the course of May, the dollar downturn exceeded our expectations, while for certain currencies, market participants preemptively priced in the economic reopening as vaccine optimism picked up. Looking ahead, June is likely to prove pivotal for major currency pairs. Read more

Fading stimulus suggests fading rally, USDCNY to hit inflection point over medium-term

Fading stimulus suggests fading rally, USDCNY to hit inflection point over medium-term

We anticipate the yuan to continue rallying, albeit at a slower pace than before, over the short run as the broad dollar continues to weaken. However, over the 6-to-12-month horizon, we expect USDCNY to reach an inflection point in which the yuan starts to weaken again due to narrowing yield differentials. Read more

Swiss National Bank to relax with EURCHF upside narrative

Swiss National Bank to relax with EURCHF upside narrative

The Swiss franc depreciation against the euro in the pandemic aftermath has been primarily due to strong efforts by the Swiss National bank to water down upside pressures on the currency amid a rapid capital inflow. Read more

PLN well-positioned to continue rallying despite divergences in CEE monetary policy

PLN well-positioned to continue rallying despite divergences in CEE monetary policy

Our view on PLN remains bullish for the remainder of the year, however, we have adjusted our forecasts since the last outlook to reflect the recent divergence in central bank policies in the CEE region and Poland’s recovery from the third Covid-19 peak. Read more

INR to rely on RBI’s support while uncontrolled second wave of pandemic unfolds

INR to rely on RBI’s support while uncontrolled second wave of pandemic unfolds

The chaotic health situation puts the country in a horrendous position while also threatening the pace of the global economic recovery as a whole. Looking forward, we believe the INR outlook is poised to remain stable with a slight appreciation bias against the US dollar, but risks to this view remain strongly tilted to the downside. Read more

Hawkish Czech National Bank to support CZK rally

Hawkish Czech National Bank to support CZK rally

We anticipate the recovery in the Czech koruna to extend below the 25.00 handle against the euro over the coming twelve months as the Czech National Bank begins its hiking cycle with inflation above target. Read more

Reopening reignites sterling’s rally

Reopening reignites sterling’s rally

Following the Bank of England's latest projections, which we are inclined to agree with, we anticipate GBPUSD to rally to 1.46 in the coming twelve months, although the level of uncertainty around our medium-term forecasts remains high. Read more

Monex Europe May 2021 FX Forecasts

Monex Europe May 2021 FX Forecasts

The anticipated US dollar downturn materialised over the course of April, with the greenback sustaining losses across the board. Looking ahead, we expect the dollar downturn to continue over the course of Q2. Read more

Loonie to continue gaining but progress to slow

Loonie to continue gaining but progress to slow

Looking ahead, we maintain our view of a cyclical and structural rally in the Canadian dollar. However, we expect the speed of the rally to start to fade as the loonie carves fresh multi-year highs over the course of the coming months. Read more

Ruble to recover as CBR hikes rates, but sanctions risk remains

Ruble to recover as CBR hikes rates, but sanctions risk remains

Sustained support from the CBR, in conjunction with subduing geopolitical tensions and a robust domestic economic recovery, leads us to believe USDRUB will recover back to the 70 handle over the next 12-months. Read more

Euro rally hinges on improved vaccine rollout in Q2

Euro rally hinges on improved vaccine rollout in Q2

With the European Commission setting an optimistic target for the number of vaccines administered in Q2, and supply contracts set to confirm this goal, we anticipate EURUSD to rally on a cyclical basis as the region catches up with the likes of the US and UK. Read more

Monex Europe April 2021 FX Forecasts

Monex Europe April 2021 FX Forecasts

Dollar strength wasn’t just a theme over the course of the last month, but for Q1 as a whole. Reflationary dynamics in the US, brought about by a strong vaccination roll-out and additional fiscal stimulus packages, caused FX markets to price in US economic outperformance. Read more

Flat Japanese yields on the back of YCC sets the ground for a weak yen recovery

Flat Japanese yields on the back of YCC sets the ground for a weak yen recovery

Contrary to our expectations of a smooth rally throughout the year, the Japanese yen broadly weakened against the US dollar over the first quarter of 2021. Most of the yen’s underperformance is attributable to a stronger dollar as markets aggressively priced in a faster economic recovery and sooner-than-signalled monetary policy normalisation from the Federal Reserve. Read more

Remaining mildly bearish, but finding pockets of deeper depreciation

Remaining mildly bearish, but finding pockets of deeper depreciation

Together, both Biden's fiscal stimulus package and more aggressive vaccine rollout in the US have increased the likelihood that the US economy will substantially outperform peers in 2021, reflected in both the increase and steepening of the US yield curve. Read more

Monex Europe March 2021 FX Forecasts

Monex Europe March 2021 FX Forecasts

FX market price action focused heavily on vaccine developments and reflationary dynamics in February. Given the important role vaccine distribution plays in FX price action, we launched a monthly vaccine distribution chartbook as a means to monitor major vaccine developments around the globe. Read more

SEK rally to continue although headwinds from Riksbank’s FX plan may emerge

SEK rally to continue although headwinds from Riksbank’s FX plan may emerge

As our previous EURSEK forecasts already envisaged moderate declines over the course of the next 12-months, the announcement by the Riksbank hasn’t resulted in any changes to our SEK forecasts against the euro while triangulations from our EURUSD forecasts have slightly altered USDSEK. Read more

Powerful rebound in Norway’s economy means rate hike is on the agenda

Powerful rebound in Norway’s economy means rate hike is on the agenda

We anticipate a continued appreciation in NOK over the coming twelve months as the currency benefits from increased global growth expectations, a continued recovery in crude oil markets and a powerful domestic economic rebound. Read more

CAD to continue structural rally but near-term headwinds remain

CAD to continue structural rally but near-term headwinds remain

Since our last CAD outlook, data released from Canada has been mixed. Sentiment gauges, PMIs and other soft data points have remained robust. Meanwhile, more timely hard data such as January’s labor force survey visibly highlight the pressure the Canadian economy remains under during the latest lockdown measures. Read more

Staying long AUD but wary of the RBA’s focus on FX markets

Staying long AUD but wary of the RBA’s focus on FX markets

While we remain structurally bullish on the Australian dollar, largely due to positive growth differentials, headwinds from the RBA are likely to persist over the coming twelve-months as loose monetary policy continues to aid the economic recovery. Read more

NBP to continue weakening the zloty until an economic recovery kickstarts

NBP to continue weakening the zloty until an economic recovery kickstarts

Our view on the Polish zloty has remained generally bullish, although some tweaks to our short-term view have been made to adjust for the National Bank of Poland’s decision to intervene in FX markets in December. Read more

USDSGD to continue downtrend as broad dollar eyed for 2021

USDSGD to continue downtrend as broad dollar eyed for 2021

Since our last SGD outlook, developments globally and in Asia have resulted in a stabilisation of the S$NEER – a trade weighted nominal exchange rate index used to control the value of the Singapore dollar by the Monetary Authority of Singapore. Read more

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The analysis team provide timely insight and commentary on developments in currency movements and their drivers.

Simon Harvey

Senior FX Market Analyst


Ima Sammani

FX Market Analyst