The Week Ahead: Central Banks in a Challenging Position

UBS expects central banks to face a difficult trade-off between fighting energy-led inflation and managing slowing growth. They recommend selling US dollar rallies and maintain a constructive view on gold.

Key Takeaways

• 1.Central banks, particularly the ECB, face pressure to tighten policy as energy prices drive input inflation higher despite stalling growth.
• 2.The US dollar momentum is fading as US yields fail to advance, prompting a 'sell-on-rallies' strategy for the greenback.
• 3.Gold remains a constructive investment with limited downside, supported by central bank demand and private investor interest.

Table of Contents

• FX opportunities of the week
• Yield pickup opportunities of the week
• Comments on recent opportunities
• Comments on select currencies and commodities
• Data calendar
• Global asset class preferences definitions
• Appendix

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