FX forecasts and associated rankings are published on behalf of Monex Europe and Monex Canada.
Monex Europe’s base case assumption of a weaker dollar by year-end 2020 resulted in strong rankings in major G10 currencies over the year-long horizon. With 2020 proving a volatile year for financial markets, we are especially proud of these results, and continue to predict a weaker dollar as the global economic recovery continues in 2021 due to vaccine distribution.
Within the G10 space, currency forecasts of note include USDCHF and USDJPY, which ranked well due to our belief that haven currencies will remain strong against a weaker dollar despite the improvement in the risk appetite.
We continue to expect a stronger yen and franc against a weakening dollar over the coming year, but for the haven currencies to weaken relative to other major trading partners as the risk environment suits procyclical currencies. Our expectation of a risk rally towards year-end also resulted in strong rankings in higher beta currencies such as SEK and EUR over the 6-month and 12-month horizon.
A recovery in EM assets upon positive vaccine news has been a long-standing conviction call by Monex analysts this year.
With the expectation of vaccine distribution centred around December, early forecasts over the 3-to-6-month horizon focused on a year-end risk rally proved correct.
As the year drew to a close and election risk also faded from the US, November saw positive headlines around Pfizer and Moderna vaccines. Our more bullish adjustments in BRL, RUB and INR to factor in these developments proved a correct decision.
Author: Simon Harvey, Senior FX Market Analyst