Global FX: Parsing more policy & growth divergence for FX
Jun 21, 2024
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Global FX strategists Meera Chandan, Ben Jarman, and James Nelligan discuss currency implications from policy meetings and economic data. Topics include RBA and RBNZ meetings, US dollar performance, Aussie Kiwi pair, China's impact on the Australian dollar, central bank decisions, and future currency trends.
US dollar shows strength but faces fluctuations due to data variations.
Reserve Bank of Australia signals possible rate hike, while New Zealand remains cautious.
Deep dives
US Dollar Strength Amidst Changing Growth Trends
The podcast highlights the US dollar's strength based on its yield advantage and exceptional economic growth. However, recent data showing moderation in US growth and weakness in flash PMIs have caused fluctuations in the dollar's performance. Despite signs of weakening exceptionalism, factors like Eurozone weakness and China's economic challenges suggest the dollar may not significantly depreciate.
Analysis of Reserve Bank of Australia and Reserve Bank of New Zealand Meetings
The discussion delves into the hawkish stance of the Reserve Bank of Australia post the 1Q GDP report, indicating a possible interest rate hike in the near future. In contrast, the Reserve Bank of New Zealand's outlook remains cautious with weak data and declining house prices. The upcoming CPI report is identified as a crucial catalyst for further insights.
European Central Banks' Decisions Impact on Currencies
The podcast assesses the European Central Banks' recent actions, including a surprise rate cut by the Swiss National Bank. The Norges Bank displayed a more hawkish stance than expected, influencing currency views. The Bank of England's potential shift towards a rate cut raises doubts despite strong UK growth. Additionally, upcoming meetings like the Riksbank's are expected to maintain rates as political and economic factors continue to shape currency movements.
This week, our Global FX Strategists Meera Chandan, Ben Jarman & James Nelligan break down the currency implications from a range of policy meetings and key economic data across Europe and Australia/New Zealand.
Speakers:
Meera Chandan, Global FX Strategy
Ben Jarman, Australian and New Zealand Interest Rate Strategy
James Nelligan, Global FX Strategy