Monex Europe has been consistently bearish on the antipodean currencies due to US/China risk and dovish local banks. On the whole, this has played out well over the past year.
The results of the monthly Reuters FX polls currency forecasting competition have been published, and Monex Europe has performed well on a number of pairs. Monex Europe topped the currency rankings for NZDUSD and USDNOK one month rankings.
Forecasts are as follows:
In general, our view at the beginning of August was another wave of US dollar strength in the short term. At the time, this was due to sustained labour market strength, and our view that the Fed’s ability to ease would be constrained. This played out well against the New Zealand dollar, Australian dollar and Norwegian Krone.
The case for further US dollar strength is now looking a bit stretched in the near term. US data is worsening and there is little risk of the Federal Reserve (Fed) not delivering a further 50 basis point cut over the next two meetings.
This suggests the dollar could soften slightly, although we believe large scale dollar weakness will require an improvement in US growth prospects.
Looking ahead, September submissions were a little more cautious about the current phase of dollar strength being seen – based off this week’s ISM miss and resulting sell-off, this does not look to have been a bad move, but the month is young.
Moderating domestic conditions, coupled with the perennial threat of further sanctions meant we were less optimistic on the Russian ruble’s potential heading into the second half of the year.
This has begun to play out, resulting in no change from Monex’s previous forecasts.