The decline in the broad dollar towards the end of the month meant that Monex retained strong rankings over the 1-month horizon for select currencies, especially within the EM space where the dollar’s decline was relatively larger following Powell’s speech. Over the medium-to-long run, Monex’s longstanding view of dollar weakness didn’t filter through to all forecasted currencies.
Volatility wasn’t absent in July with the re-emergence of Covid concerns, dovish tone from Chair Powell, moderation in growth expectations, and turmoil in Chinese markets. Despite this volatility, Monex’s near-term forecasts weathered the storm, albeit better in the EM space than G10.
The Federal Reserve’s hawkish shift in June caught markets off-guard and resulted in broad US dollar strength throughout the remainder of the month. Despite calling for further USD depreciation, Monex’s conservative stance on further USD downside meant shorter-term forecasts weathered the storm of a stronger dollar.
Monex’s expectation of US dollar depreciation for May fared well in Reuters poll rankings, with firming results for majors like the euro, the yen, Nordic currencies and a wide array of EM currencies. Our calls for a weaker dollar have been supported by the Fed’s accommodative stance
Monex Canada’s broad expectations of a downturn in the US dollar in April yielded positive short-term forecasts over the 1-month and 3-month horizon. Looking ahead, our May forecasts anticipate a continued decline in the US dollar, albeit at a slower pace than that seen in April.
Jamil’s session “Turning Ambition into Achievement” took Monex employees through a practical understanding of how to cultivate mindsets for optimising talent in a disrupted world. He believes that “for people to act differently, they need to think differently,” which was the pinnacle point of the entire talk.
Monex’s improved forecast accuracy came at a time when the broad US dollar defied expectations of a substantial structural decline as reflationary dynamics remained prominent. Our more conservative view on the dollar’s decline paid dividends in this environment and resulted in a top 10 ranking for both USDJPY and GBPUSD.
In contrast to a volatile February, March saw a more decisive trend in the dollar. Against the expanded majors basket, only ZAR, MXN, NOK, CAD and INR posted gains against a broadly resurgent dollar. Our more selective stance on USD weakness in the EM space yielded a positive set of near-term forecasts, notably in ZAR, CNY and BRL.
Our more conservative views on EM FX boded well, resulting in strong performances in USDBRL and USDZAR over the one-month horizon. Meanwhile, the correction in the G10 space on the final day of the month saw our one-month rankings slip, however, our longer-term views remained accurate.
MonFX Pte Ltd, the independent Asia-Pacific (APAC) subsidiary of the Monex Group, is continuing to strengthen its global foreign exchange offering with the appointment of Alvin Lai as Chief Executive Officer (CEO) and Lim Mei Shern as Head of Compliance. Alvin Lai’s appointment is subject to regulatory approval.