Currency Outlook

AUGUST 2022 – IN BRIEF

What Happened

  • USD managed to escape July with a 0.2% uptick per the Bloomberg Dollar Spot Index
  • Commodity-based and Emerging-Market currencies recovered with heightened volatility
  • Norwegian Krone (NOK) and Chilean Peso (CLP) were the best performers for representing major suppliers of natural gas
  • Euro dropped below parity momentarily while dealing with a crippling energy crisis
  • Central banks continued tightening, but the Bank of Canada surprised all with a full 1.0% increment

 

Monex USA’s View

  • The debate over how deep of a recession we will experience will keep FX flows wild
  • August will test Europe’s economic stability as people go on holiday, use gasoline, travel
  • China’s ongoing problems make for a tough overall recovery while diplomatically engaging with the U.S. over trade and Taiwan relations
  • Equities will try sustaining momentum as Wall Street embraces the idea of a short downturn
  • Greenback may have room to lose following a less hawkish Fed in its latest hike decision

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