USD/JPY weakness will be a main theme in the year ahead, according to a report from Barclays.
Analysts there say USD/JPY will track down to 106 by the end of the Q3 2019. Meanwhile, the euro and pound will stay relatively flat.
As part of a new set of forecasts, Barclays revised higher expectations for the US dollar in the year ahead along with four Fed hikes in 2019.
"While our US growth and interest rate forecasts remain unchanged, and strong underlying momentum lends them upside risks, we have had to moderate our forecasts for most of the rest of the world. There appears to be less autonomous growth in other economies and less spill-over from the US fiscal expansion than we expected," the write in a note.
For the euro, they see modest weakness to 1.15 at year end followed by a period of stability. Eventually they see ECB inflation forecasts moving lower.
As for USD/JPY, they see BOJ normalization and risks towards a faster decline due to trade and geopolitical developments.
For GBP, they say fears are overdone and that they are confident of an exit with a transition deal. They say that should lead to a "small bump" that will fade when the market realizes it won't be accompanied by a BOE hike.
As for the Canadian dollar, they say there is limited room for appreciation with the market already pricing in three hikes in the year ahead.
In the shorter term, they believe the New Zealand dollar will slide to 0.6300. at year end.
"We expect the NZD to be a notable underperformer over the coming quarters, as low inflation and sub-potential GDP growth support the prospect of RBNZ rate cuts over the coming year," they write.
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.