Monex’s May 2022 FX Forecasts

While cross-asset volatility has been relatively high over the past month, a large proportion of this has been driven by fluctuations in bond markets, where concerns over global growth and inflation conditions are most visible. The gyrations in bond market pricing have been influential for FX markets given that interest rate differentials continue to be the dominant driver of FX price action. However, it is not just rate differentials that have resulted in a stronger dollar over the course of April, but spikes in broader market volatility. Amid these uncertain conditions, the dollar’s safe haven attributes are acutely visible, especially in the context of a stronger US economic backdrop and a perceivably more hawkish Federal Reserve. In response to these developments, we have marked-to-market our April forecasts. In the near-term, given the increased level of uncertainty over the global macroeconomic backdrop, we expect recent dollar strength to persist before a stabilisation in market volatility and a reduction in inflation pressures in H2 result in the greenback trimming gains.

You can read our May 2022 FX Forecasts report here:

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Authors:

Simon Harvey, Head of FX Analysis

Jay Zhao-Murray, FX Market Analyst

Disclaimer

This information has been prepared by Monex Canada Inc., an execution-only service provider. The material is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is, or should be considered to be, financial, investment or other advice on which reliance should be placed. No representation or warranty is given as to the accuracy or completeness of this information. No opinion given in the material constitutes a recommendation by Monex Canada Inc., or the author that any particular transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, it is not subject to any prohibition on dealing ahead of the dissemination of investment research and as such is considered to be a marketing communication.