Corpay Currency Research: Mid-Year Update

After dodging a series of major shocks and overestimating the speed and impact of monetary policy transmission in the first half of the year, financial markets seemed to capitulate in the last few weeks, with volatility measures falling and the dollar coming under pressure as risk-sensitive currencies and asset prices climbed. We think this “melt up” could continue, with emerging markets and high-risk currencies outperforming their safe haven and low-yielding counterparts for a few months yet. But we also expect deeper global imbalances to begin reasserting themselves in the autumn months, helping the dollar defy overly-bearish consensus forecasts by early 2024. 

To see our latest forecasts - updated to incorporate early July's data releases and central bank decisions:

Corpay Currency Research