FX view: central banks are relevant again

James Swerling from Ebury gets straight to the point – central banks are relevant again.

It’s the first time since 2018 that higher rates are coming, and the first time since the mid-2000’s that the RBA and the Federal Reserve are hiking simultaneously. He’s getting set for more sustained periods of volatility in the FX markets compared with the last five years. James points out that typical FX moves a couple of years ago were 0.4% per day with 1% moves rare, and now January has been peppered with 1% or more.

In a contrarian view, he expects the USD to weaken from early March when it embarks on its rate hike cycle. Proof? In the first 100 days of the five big tightening cycles of the past 35 years, the big dollar has actually weakened. We also chat about the outlook for the yen – is it still a hedge against volatility, and finally what is relative value when comparing the outlook for the Australian and New Zealand dollars.

Watch the full interview here