Currency Outlook

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