UBS expects the US dollar to weaken as the Fed pivots to easing and energy prices normalize. They recommend selective exposure to pro-growth and commodity-linked currencies like the SEK, AUD, and NZD.
Key Takeaways
- 1.The US dollar is expected to weaken as its yield advantage fades and markets expect the Fed to resume its easing cycle while energy prices normalize.
- 2.Select currencies including SEK, NZD, AUD, and CNY are rated as 'Attractive', benefiting from growth factors, high yields, or trade surpluses.
- 3.FX volatility has remained unexpectedly low despite geopolitical risks and oil price spikes, due to a balance of factors like the AI investment boom.
Table of Contents
- FX Monthly VIEW
- Currencies
- Risks to our view
- Appendix
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Authors
Dominic SchniderTilmann KolbConstantin BolzTeck Leng TanClémence DumoncelWayne Gordon
Securities
EURUSDGBPUSDEURSEKUSDCNYEURNOK
Themes
Monetary Policy DivergenceGeopolitical Risk & Oil VolatilityCommodity-linked & Pro-growth FX
Regions
North AmericaEuropeUKUnited StatesSwedenAustralia