reports
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Little reason to leave the dollar just yet
The dollar remains in demand as investors await the next chapter in the Middle East. Elevated energy prices are continuing to help the dollar, as is a seemingly robust US economy. Beyond second-tier US data today, the focus will be on whether any ceasefire can be agreed and whether energy prices can avoid another large leg higher
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Back to escalation
We have seen the first part of the de-escalation trade in FX. The second – another USD leg lower – requires greater clarity on Strait of Hormuz reopening plans, which currently appear distant after the headlines overnight. A new wave of escalation is now driving EUR/USD down again. Any downside surprise in tomorrow's US data could support more Fed repricing
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: ECB hawks can make euro a winner in de-escalation trade
The dollar has taken a hit on a new de-escalation trade. President Trump has now signalled that the war will end in two to three weeks, but plans for the reopening of the Strait of Hormuz remain quite unclear. EUR front-end rates are catching up with the downside today, but hawkish ECB comments can make them stickier and make the euro emerge as an outperformer
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Searching for the off-ramp
Equities have found support in a report that the US may be willing to end its military activities in Iran even if it leaves the Strait of Hormuz closed. That will be scant solace for the global economy unless a pathway to lower energy prices becomes clearer. With US light crude now over $100/bl, we could hear more conciliatory US talk and the $ could soften
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Dollar in demand; others left to hike, intervene, tighten co...
The weekend delivered no off-ramp to the crisis in the Middle East and the market remains braced for potential escalation. The dollar remains in demand, with US trading partners left to consider rate hikes, intervention or regulatory measures to protect their currencies. Unless this week's US labour market data surprises on the downside, $ will stay bid
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Just another ‘anti-decay' Friday
Normally, in the FX options world, the value of an option declines ahead of a weekend due to time decay on the view that nothing happens. This March, however, FX options prices have been rising into the weekend in an 'anti-decay' move as traders brace for weekend event risk. Expect the same today, given little clarity on escalation versus ceasefire
- Francesco Pesole
Norges Bank is ready to hike rates
Norway's central bank has signalled a hike is coming soon. Its inflation concerns are broad-based, not just limited to the energy price shock, and we now expect a hike in May – although timing depends on war developments. With 60bp priced in this year, we think this is the peak for front-end NOK rates, but our baseline EUR/NOK profile remains downward sloping
- Chris Turner
- Francesco Pesole
FX Daily: USD needs a spark for the next leg lower
Risk sentiment has improved, but oil prices sticking above $100/bbl are keeping USD afloat. Markets may well require some more convincing headlines on de-escalation to take the dollar meaningfully lower from here. In Norway, we expect a rate hold this morning, but a hawkish shift seems likely
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Central bankers need to talk tough
Energy prices, risk assets and FX markets continue to bounce around on the latest headlines out of the Gulf. It seems dangerous to position for an early resolution of the crisis, with the Iranians likely to want to take high energy prices as leverage in any negotiations. We have several central bank speakers in Europe today – very likely to sound hawkish
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Headline-driven trading continues
The dollar continues to be bounced around by the latest headlines on the war in the Middle East. Traders will be eager to hear, particularly from the Iranian side, whether there is any realistic chance of ceasefire negotiations getting started. Until then, any further rally in risk assets and sell-off in the dollar will prove limited
- Chris Turner
- Francesco Pesole
FX Daily: Sell-everything environment favours the dollar
Risk sentiment is deteriorating at the start of this week as the US and Iran appear far from peace discussions. Bonds and precious metals are following equities lower – an environment that heavily favours the dollar. Alongside Gulf developments, we'll watch central bankers' comments closely this week as a test of the recent hawkish repricing
- Francesco Pesole
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Hawkish hangover
Powell's mildly hawkish hints on Wednesday were dwarfed yesterday by reports the ECB is considering a hike in April and the most dovish BoE member is openly discussing monetary tightening. The dollar is suffering on the back of surprising overseas hawkishness, but also from some tentative optimism in energy markets
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Central bank ‘ducking' to leave oil in the driver's seat
The Fed failed to offer any real guidance to the market, setting the script for other central banks to follow today. The result is that oil prices can stay firmly in the driver's seat. Still, in the case of the ECB and Bank of England, the very large hawkish repricing of the past few weeks raises risks of dovish surprises and negative currency impact
- Francesco Pesole
- James Knightley
- Francesco Pesole
- James Knightley
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: Dot Plot revision can support USD
We see a high risk that the Fed will revise its median Dot Plot to signal the next cut only in 2027. That could influence markets in a meeting where caution could be the name of the game, given the highly volatile situation. We see upside risks for the dollar. The CEE region sees some relief, but markets still expect rate hikes, which will soon test central banks
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: First war-driven hike in the books
The RBA is the first G10 central bank to deliver a rate hike on the back of rising energy prices, although AUD is struggling to find its shine after an equity-driven correction. The USD has started the week on the soft side, on tentative optimism about the Hormuz reopening, but we could see a more muted FX market today ahead of tomorrow's FOMC
- Benjamin Schroeder
- Carsten Brzeski
- Francesco Pesole
- James Knightley
- James Smith
- Michiel Tukker
- Padhraic Garvey
- CFA
What our new energy price scenarios mean for markets
We have published new scenarios for oil and gas prices based on recent developments in the Gulf. Here, we discuss the implications for interest rates and FX. Our baseline continues to assume rate cuts by the Fed and no hikes by the ECB. USD and EUR rates could end the year lower as the growth outlook worsens, and we still expect a return to 1.20 in EUR/USD this year
- Chris Turner
- David Havrlant
- Deepali Bhargava
- Dmitry Dolgin
- Francesco Pesole
- Lynn Song
- Mateusz Sutowicz
- Min Joo Kang
- Muhammet Mercan
- Peter Virovacz
- Valentin Tataru
FX Talking: Same shock, new drill
Conflict in the Middle East is lifting energy prices and the dollar, but this isn't a 2022 repeat. With the Fed unlikely to tighten aggressively and Europe better equipped for an energy crisis this time around, USD upside looks limited. In the CEE region, Hungary's upcoming election is in focus; in Asia, Indonesia and the Philippines appear more vulnerable
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