ANZ out with their monthly FX Outlook


USD does not have a compelling story to drive it sustainably in either direction

  • We think the currency market's focus needs to shift from being completely USD-centric to focussing on the drivers of risk appetite
  • That framework dominated before the 2008 crisis, and it will likely dominate once again
  • With global central banks moving broadly in the same direction (towards tighter policy), we also think that relative monetary policy will drive tactical trading opportunities, rather than strategic trends
  • Shifting frameworks to focus on the level of aggregate policy accommodation and aggregate growth and using risk appetite rather than the fortunes of the USD as the focal point for FX market forecasting will generate more sustaining and trending outcomes


  • The JPY is set to weaken as USD/JPY pushes back towards 120.
  • The EUR will also weaken as its low yield means it remains a funding currency.
  • A cautious cycle from the ECB - which has one eye on the impact that the EUR can have on financial conditions - will also provide a lid.
  • In the UK, the Bank of England cycle will be shallow and its ability to sustainably support the GBP is limited.
  • For the AUD and NZD, we continue to look for further strength. Domestic stability, strong global growth, low volatility and attractive valuation should all provide tailwinds.


  • We have downgraded our forecasts for both the EUR and the JPY and look for further weakness in both from here, particularly against the AUD and NZD