Out now: G10 FX report and currency forecasts
19/Apr/2016 • Currency Updates•
G10 CURRENCIES OFF TO A VOLATILE START IN 2016, US DOLLAR AND STERLING PLUNGE
G10 currencies have been quite volatile so far in 2016 and not necessarily in line with the stances of their countries’ respective central banks or economic fundamentals.
Here are a few key findings:
Fed rate hike timetable dominates
Financial markets are not even pricing in one Fed hike this year and, as a result, the US Dollar has fallen across the board, suffering its worst quarterly performance in six-and-a-half years.
Easing monetary policies
Central banks in Japan, New Zealand, Sweden, Norway and, most notably, the Eurozone have all cut their interest rates so far in 2016. In spite of this, every G10 currency, barring Sterling, ended the first quarter higher against the US Dollar.
Brexit concerns weigh on Sterling
Sterling has fallen 5% in trade-weighted terms. Uncertainty regarding the EU referendum in June is dominating national newswires, with opinion polls changing significantly week on week.
Relief for oil-dependent currencies
Oil prices have stabilised so far this year, rallying back above $40 a barrel in March. As a result, the commodity-driven Norwegian Krone and Canadian Dollar have recovered from their recent multi-year lows.
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