Millennium Global is pleased to share its latest Macro and Currency Quarterly Outlook Q3 2020 document, which examines several themes.
- We see the USD as vulnerable to slower momentum in US activity as the epidemic has yet to be contained and fiscal support to households and firms is likely pared back. Meanwhile we expect the recovery in the rest of the world to take hold, with China’s recovery anchoring the outlook for Asia and the second phase of fiscal support being in place in a number of developed economies.
- With fiscal policy more supportive of demand recovery, both at national and EU levels, smaller growth divergence within the region and a reduction in sovereign risk premium, EUR has scope to benefit from rare cyclical support vs. USD in our view.
- A sharp bounce-back in growth underpinned by additional fiscal stimulus is likely to boost AUD vs. USD, amid an improved BoP position. In contrast, slower recovery in Canada given the drag from the oil sector and poor consumer confidence should leave CAD underperforming AUD.
- Downside risks for GBP vs. EUR remain in our view, stemming from cyclical underperformance reflecting a weaker consumption outlook and Brexit uncertainties depressing investment.
- We see CZK best positioned to benefit from a V-shaped recovery in Germany as CNB is likely done with monetary easing and fiscal stimulus is large.
- INR is likely to play catch up within EM after being held back by RBI intervention as activity bottoms, the current account has turned to a surplus and foreign equity flows pick up.
- KRW is set to benefit in our view from the regional growth rebound, as Korean recovery benefits from a large fiscal stimulus and as a flare-up of US/China tensions and significant CNY depreciation remain unlikely before US Nov elections.
The document contains the views and opinions of our Global Economic Research and Strategy Team (Claire Dissaux and Elisa Baku) as of 7 July and does not necessarily represent the views and opinions of Millennium Global or any of its Portfolio Managers.
If you’d like to request a copy of the Macro and Currency Outlook: Q3 2020, please contact us: