Key insights from our latest G4 analysis
02/Jun/2016 • Currency Updates•
New analysis across the US Dollar, Euro, Sterling and Yen.
FOMC communications turn hawkish
The minutes from the April meeting, published in May, explicitly warned markets that a June hike was a distinct possibility. As rate markets scrambled to price in Federal Reserve hawkishness, the Dollar rallied against all major currencies.
Possibility of further monetary easing puts pressure on Euro
Mario Draghi’s so-called ‘bazooka’ of stimulus measures appears to have had little effect on price growth in the Euro-area. We think that the ECB is capable of introducing additional easing measures if inflation in the Eurozone fails to show meaningful improvement in the coming months.
Brexit remains biggest worry for UK businesses
Uncertainty surrounding a possible Brexit has begun to filter its way through to domestic economic performance, with the UK economy suffering from a noticeable slowdown since the beginning of the year. Future Sterling movements will likely depend on the outcome of this month’s EU referendum.
Yen’s strength defies Japan’s economic fundamentals
The Japanese economy has shown zero growth over the past two quarters – the worst performance among G10 economies. However, we adjust our Yen forecasts to reflect the currency’s recent unexpected strength.