GS Morning: FX Resolution Framework, TWD Update, SARB Recap and Supply Shortage Growth Risks

This GS Morning report outlines a framework for FX rotation post-conflict resolution, upgrades the view on TWD due to technical flow improvements, recaps a dovish SARB hike, and analyzes global GDP risks from Middle East supply shocks.

Key Takeaways

• 1.An eventual resolution to the current conflict would likely trigger a rotation in FX performance from energy exporters (like NOK) to high-beta energy importers (like SEK, NZD, GBP, KRW).
• 2.The outlook for the Taiwan Dollar (TWD) is turning more positive as life insurer hedging drag diminishes and trade surplus conversion may improve.
• 3.The SARB's 25bp rate hike was perceived as a dovish surprise by the market due to a split 4-2 vote, despite hawkish inflation projections and adverse risk scenarios.

Table of Contents

• 1) FX STRATEGY (JENKINS) – Resolution Ruminations
• 2) TWD Update
• 3) CEEMEA ECON (MATHENY) – SARB Recap
• 4) GLOBAL ECONOMICS (PETERS) – Assessing Global Growth Risks from Middle Eastern Supply Shortages

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