These forecasts are from Wells Fargo analysts. In the pic below I have stuck a box around the majors. AUD looks very sad ....
The report is long one. Its from last last week so this is a bit of a catch-up. In, very, brief:
- Given our view for more Fed tightening than financial markets are priced for as well as a slower pace of global growth, we believe the U.S. dollar can strengthen through until mid-2023. However, as the U.S. economy falls into recession next year and the Federal Reserve becomes one of the first major central banks to cut rates, we believe mid-2023 will be a cyclical peak for the greenback, and we expect the U.S. dollar to begin softening in the second half of 2023.
- In the G10, we are most optimistic on the prospects for the Canadian dollar. We believe the Bank of Canada will maintain a relatively hawkish stance on monetary policy, while elevated energy prices and relatively sound consumer finances are also favorable factors. In addition, we expect the Bank of Canada to hold policy rates steady even as the Fed eventually begins to ease monetary policy. We look for modest CAD strength against the dollar by mid-2023, the most optimistic view on any G10 currency.
- We expect the Japanese yen to be an underperformer within the G10 space. The Bank of Japan is not likely to tighten its accommodative monetary policy stance, including raising its cap on Japanese government bond yields, within our forecast horizon. As the Fed lifts policy rates and shrinks its balance sheet, these diverging paths for monetary policy should continue to place depreciation pressure on the Japanese currency.
- Prospects for the British pound have weakened as we expect a less hawkish Bank of England relative to financial market pricing. While inflation is elevated in the U.K., economic activity is decelerating amid high energy prices and declining purchasing power. As the BoE underdelivers, the British pound should weaken sharply over the remainder of 2022 as well as into next year.