This document contains the views and opinions of our Global Economic Research and Strategy Team (Claire Dissaux, Mattia Taboga and Meena Bassily) as of 10 October and does not necessarily represent the views and opinions of Millennium Global or any of its Portfolio Managers.

Millennium Global are pleased to share Millennium Global’s Q4 2018 Macro and Currency Outlook Highlights document, which examines several themes including:

  • GBP is likely to be hit by domestic political instability risks over the next couple of months and the risk of a scenario for “no deal” with the EU.
  • We believe that cyclical drivers of the USD, including growth momentum and policy differentiation, are still positive and will remain in place at least until the midterm elections in November.
  • The list of tail risks to the global economy has grown, including a disorderly Brexit, an Italian banking sector and sovereign debt crisis, a further escalation in US protectionist policies, an EM crisis and a supply-driven surge in oil prices. In addition, none of these risks can be addressed through coordinated monetary or fiscal policy response by major economies and/or China as policy space has dramatically been reduced since 2008.
  • We see a more positive backdrop for SEK than NOK in Q4, given relative currency valuation and an underpriced Riksbank in Q1 2019 compared to a cautious start of the Norges Bank tightening cycle, which looks fairly priced.
  • Our base case is for the USD strength into November, in particular vs. EUR and JPY. With EUR trade-weighted valuation becoming rich, largely due to EM/CNY depreciation, downside risks building for Euro area growth in turn reviving political and fiscal challenges into 2019, we look for downward pressure on EUR vs. USD.
  • We see a case for a selective rebound in EM currencies, based on an overshoot of some EMFX valuations and the start of external adjustment.

Please click here to view the highlights document. If you are interested in the full Millennium Global Macro and Currency Outlook Q4 2018, which explores a wider range of markets and views, please contact us.