Currency Outlook

The report highlights a trend of a 'grinding' USD appreciation driven by hawkish Fed expectations and US economic resilience. It provides outlooks for G10 and EM currencies, including specific strategies for GBP, JPY, and AUD.

Key Takeaways

• 1.We see the USD grinding higher against several major and EM currencies in the coming months, though a sharper rally is unlikely due to the lack of a rapid Fed hiking cycle.
• 2.USD-JPY is expected to stay in a new higher range of 160-165, with heightened risk of MoF intervention despite intervention effectiveness being limited without BoJ hawkishness.
• 3.The Open USD (OUSD) stablecoin launch is a notable competitive development, aiming to share reserve income with partners, though adoption will depend on scaling beyond incumbent network effects.

Table of Contents

• Summary
• FX: Key trade themes
• Overview: Grind it out
• GBP: Dare to dream
• JPY: A new and higher range
• AUD: Between hops
• G10 FX trading rules
• Open USD: Share the yield, share the hype
• Platinum Group Metals
• FX long-term forecasts
• What drove the FX market...
• Key FX forecasts

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