Podcast by Millennium Global with Piya Sachdeva & Eve Danbury
EPISODE 2:
In this episode of the Macro Matters podcast by Millennium Global, we share our Q3 2022 Global Currency & Macroeconomic Outlook. Our Lead Economist, Piya Sachdeva and Analyst, Eve Danbury discuss the macro themes that will matter most in the coming quarter and how these are expected to impact global currencies.
Discussion points:
01:55: Going into Q3, inflation growth and monetary policy, within those themes, what are the main economic considerations you are thinking about as potential currency drivers ?
04:45: The picture that you painted of slowing growth but still high inflation is certainly a challenging one for central banks - where does this leave your view on the Fed?
06:28: How are you thinking about other central banks in G10?
08:15: Delving into a bit more detail now, the US inflation is high but likely peaking and with that the Fed is likely to continue to tightening from here, whilst those inflationary risks remain, what does this mean for the broader USD, are we likely to see both sides of the USD dollar smile at play here?
11:12: Sticking with G3 still, the Euro. As we know, EUR has struggled to trade stronger even with the move higher in European rate differentials and now that the rate path for the next quarter has effectively been pre announced by the ECB, is there only downside risks from here? And how are you thinking about the upcoming possibility of an anti-fragmentation tool?
13:20: Taking a bit of a turn now to the one economy that is yet to see any monetary tightening, Japan. Expectations ahead of the most the recent BoJ meeting were mounting, will they or wont they change yield curve control, are they concerned about the recent currency weakness at all. Take us through your view on the JPY, and how we are thinking about yen in the midst of recessionary fears.
15:50: Staying in G10, in terms of Sterling and the limited effect that that's had on the currency so far. Moving over to the monetary policy side of things, The Bank of England has been the posterchild of Central banks for hiking into slower growth. Are there larger hikes to come or is a pause more likely at this stage?
17:32: We can't talk through a macro outlook without covering swiss and the most recent surprise SNB rate hike, the first hike in 15 years, that saw EURCHF trading to parity and CHF the strongest G10 currency last month. How are you thinking about CHF in what is now possibly a new regime for the currency?
18:42: Looking more to commodity currencies now, AUD and CAD. Both economies have faced aggressive levels of inflation, both have also been witness to monetary tightening from CB's already and both economies have also benefitted from highs commodity prices and strong terms of trade - how are thinking about AUD and CAD now as risk currencies?
20:08: Finally touching on EM and Asia specifically, CNH. Gone from being a low vol to high vol currency in the space of 3 months, with China having faced another new wave of covid cases and aggressive social restrictions, what are your thoughts for the yuan going forward from here?
IMPORTANT DISCLAIMERS: This piece of content contains the views and opinions of our Global Economic Research and Strategy Team as of 7th July 2022 and does not necessarily represent the views and opinions of Millennium Global or any of its Portfolio Managers. This information is intended for Professional Clients only, not retail clients. This information does not constitute an offer to buy or a solicitation of an offer to sell and does not constitute an offer or solicitation in any jurisdiction in which such a solicitation is unlawful or to any person to whom it is unlawful. Past performance is not a guarantee or reliable indicator of future results. Forecasts are not a guarantee or reliable indicator of future performance. For further information please see Important Disclaimers on https://investments.millenniumglobal.com/marketing-disclaimers
