See the latest Australian dollar analysis here:
Credit Suisse again today:
Our expectation for ongoing USD gains remains intact, and becoming broader based. Last week, several Fed officials suggested that the Fed could potentially speed up the pace of asset purchase tapering beyond what is currently planned. On top of this, President Biden’s decision to re-nominate Jerome Powell as Fed Chair removed the most likely source of near-term correction risk for the greenback. In this context, by yesterday morning the US rates complex had re-priced yet again to factor in 75bp of rate hikes in 2022 starting in Q2, and a further 75bp over the course of 2023. But with “terminal rate” rate expectations still subdued around1.75%, there is arguably still more work to be done.
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For this reason, we have had bullish USD targets against EUR (where we target EURUSD 1.1150) and JPY (where we target USDJPY 118) for some time already. But the outlook for the pro-cyclical and especially EM space is still darkening further too. The spectacular rise of USDTRY continues unabated: from a general top-down perspective, the fact that one of the larger countries in the EM space is exhibiting this type of price action is a reminder that the space always poses hard-to-manage political risk and the possibility of economic unorthodoxy.
In order to reverse the weak TRY trend we think the CBRT will need to deliver a sizable rate hike. Until then, we see scope for further USDTRY strength to the 14.00 area. As for RUB, we expect the tension between Russia and the West to remain high in the short run: this leave us reluctant to recommend USDRUB downside trades. We raise our USDZAR target to 16.50, given the lack of obvious rand-positive domestic catalysts. Uncertainty around the Banxico governor nomination represents a new unsupportive MXN factor: we now target USDMXN at21.63. In Chile, we expect CLP stabilization in the near-term, but see scope for USDCLP to rebound in our 810-840 target range as we near the 2ndround vote in presidential elections. Ahead of tomorrow’s Riksbank rate decision, we raise our EURSEK target from 9.80 to 9.95. Lastly, in Asia, we revise our USDKRW target higher to1,175-1,200 and expect USDSGD to trade in a higher 1.36-1.40 range, but still look for USDTWD downward momentum within current 27.50-28.00 range.