Hints and tips:
...The rates picture is more mixed, as rates tend to be highly correlated across the G10....
...The rest of the G10 group of heavily traded currencies are down against the dollar, with the euro losing 0.9 per cent, the Canadian dollar down 1.7 per cent and the Japanese yen sliding 4.1 per cent....
...This has dramatically increased the risk for an even weaker euro-dollar, even parity,” said Athanasios Vamvakidis, global head of G10 foreign exchange strategy at Bank of America....
...Investors were “jumping the gun” by predicting aggressive Fed cuts late last year, and this year’s rally has been driven by a correction of that view, according to Athanasios Vamvakidis, global head of G10...
...“Suddenly the UK looks more boring compared to other countries — and boring is good,” said Athanasios Vamvakidis, global head of G10 FX strategy at Bank of America. “It means you avoid volatility.”...
...This involves a lot of hard maths that’s beyond the scope of a blog post so we’ll skip to the conclusion, which is that among G10 currencies seasonal patterns have been persistent only for the New Zealand...
...very good chance in 2024 that we will start talking about Europe in the same way we did in 2019, a region characterised by chronically insufficient aggregate demand,” said Ralf Preusser, global head of G10...
...Support for sterling comes as the pound has been the second best performing currency in the G10 this year....
...As it was back then, sterling is the G10’s best year-to-date performer (an arbitrary measure but it’s as relevant as any arbitrary measure): As it was back then, the longer term view is . . . less favourable...
...The return of meaningful positive interest rates among the major G10 currencies means that carry trades are likely to come back into fashion....
...“We think the US dollar can go further on US exceptionalism,” said Yasmin Younes, a strategist at Citi, adding that the Federal Reserve still has more rate cuts priced in for next year than any other G10...
...September’s decline in sterling marks a sharp reversal from the first half of 2023, when it was the best-performing G10 currency as it climbed from the record low it touched against the dollar in the wake...
...It had been the best performing G10 currency leading into the summer and is now up only 1.2 per cent against the dollar since the start of the year....
...Jordan Rochester, a senior G10 FX strategist at Nomura, added that the Bank of England is now acting “much more like the Fed, and making interest rate decisions based on whatever the latest inflation data...
...“We, and increasingly the market, doubt that the Fed will hike again after the July 26 meeting,” said Steve Englander, head of G10 FX research at Standard Chartered....
...“The UK economy is holding up a lot better than a lot of people had feared,” said Paul Robson, head of G10 FX Strategy at NatWest....
...The UK seems to have a longstanding problem with structurally higher inflation than many other G10 countries, which is beyond our remit to diagnose right now....
...baseline policy stance, allow for risk that the Fed is done hiking but not shut down the possibility of more tightening, while damping expectations of early cuts,” said Steve Englander, head of global G10...
...in excess savings in the last year or so is consistent with our medium-term view of the US economy slowing most rapidly in H2 and the Fed being closer to easing policy than most other central banks in G10...
...GBP is the best-performing G10 currency this year: Cable recently touched its highest level since last summer: And TS Lombard is shook....
...Here’s Goldman on the pound: Despite all the hand-wringing, Sterling is the best performing currency in the G10 this year....
...Canada was the first G10 economy to hint that it is ready to pause its tightening cycle, noting in December that there had been a slowdown in domestic demand....
...“The trend has been very much in favour of dollar weakness, so it doesn’t take much to push it further in that direction,” said Alan Ruskin, head of G10 FX strategy at Deutsche Bank....
...“Last year was a perfect storm for the euro of high energy prices, the war in Ukraine, China’s zero Covid policy and the ECB really behind the curve,” said Athanasios Vamvakidis head of G10 foreign exchange...
...George Cole, economist at Goldman Sachs said that his base case “is that G10 central banks will in general complete their hiking cycles relatively soon, before ultimately lowering rates in years to come....
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