Over the last 10 years, the ECB has gone through two tightening cycles, April 2011 and July 2022. Central bank tightening may or may not feed into currency price action as the premium to hold assets in the denominated currency increases and carry attractiveness rises. However, over the last decade, this has not been the case for the single currency. Our calculation shows the EUR/USD fell more than 1.0% on average 30 days into the ECB tightening cycle, and while the sample siz

End-2026 Markets are pricing a peak close to 2.50-2.75% with the highest probability mass centered at 2.50%. This is in line with the Reuters poll which shows >60% of economists expecting one more hike this year (most likely September). 2027: The ECB’s own Survey of Professional Forecasters (Q2 2026) expects average DFRs of about 2.25% for 2027, with the modal outcome closer to 2.00–2.25%. Previous Bloomberg surveys had also suggested a partial reversal in 2027 to protect gro

Overall, the US economy continues to show resilience despite higher energy prices, which will push household expenses higher. Strong US data have offered some support to the dollar, but we expect the dollar to weaken in the coming months due to structural factors. We forecast the Fed to remain on hold, but if the data continue to be strong, we do not rule out a rate hike. That said, the probability of a hike during the summer remains low. Our baseline remains four ECB hikes i

Below we show the daily correlations, via dollar cross rates, between a group of currencies against both the Philadelphia Semiconductor Index (SOX) and the broader tech sector represented by the Nasdaq 100. Looking at correlations since the tech sector began to surge at the start of April, within the G10 space, it is the Swedish krona which retains its mantle as the most tech-sensitive currency, while the yen is the least correlated to the sector. And somewhat surprisingly, i

The Trimmed Mean PCE is often viewed as a cleaner signal of medium-term inflation trends because it is less sensitive to volatile items. At 2.3%, it suggests inflation is moving closer to target but not yet fully there, especially with headline PCE rising to 3.8% in April due to broader price pressures. The Trimmed Mean has shown more stability and a slightly softer trend than the official core PCE (which excludes only food and energy). This divergence has been notable since

The CPB World Trade Monitor, produced by the Netherlands Bureau for Economic Policy Analysis (CPB) on behalf of the European Commission, tracks global trade volumes with a lag of about two months. World merchandise trade volumes contracted by 2.1% M/m in March as regional disruptions took toll; this is the largest one-month decline since the Covid crisis. Imports from Africa and the Middle East plunged 11.2% while exports contracted by 32.3% due to the ongoing war in the Gulf

We forecast Brent crude to average USD100/bbl in Q2, before falling to USD90/bbl in Q3, further to USD80/bbl in Q4. and rising to USD85/bbl next year. We expect Brent to trade well above the pre-war level of USD60-70/bbl even after a reopening of the Strait of Hormuz. Prediction markets are increasingly sceptical of the near-term outlook for a reopening of the Strait of Hormuz. If/when it opens again, it will likely take some time, probably a couple of months, for production

Fertiliser production is also highly energy-intensive and closely linked to natural gas prices. Higher energy costs have therefore amplified existing supply disruptions. Several fertiliser producers across both the Middle East and South Asia have either reduced or halted production entirely. India has reportedly instructed fertiliser producers to cut natural gas consumption to around 70% of normal levels due to supply shortages. Fertiliser prices have already started to rise

We expect GDP to remain on a recovery path, though the pace of growth should moderate in the current quarter amid energy supply disruptions. We think recent data support a Bank of Japan rate hike in June. Separate from the data, the BoJ’s board member, Junko Koeda, signalled support for raising policy rates, citing the possibility that underlying inflation may exceed 2%. She is considered a hawkish-to-neutral policymaker. Koeda didn’t cast a dissenting vote in April, but she

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As of the 2026 joint review, Canada is generally less inclined than Mexico to take significant risks in fresh or aggressive USMCA renegotiations, because of differences in economic vulnerability, negotiating leverage, political dynamics, and strategic priorities. As of the 2026 joint review, Canada is generally less inclined than Mexico to take significant risks in fresh or aggressive USMCA renegotiations, because of differences in economic vulnerability, negotiating leverage

Japanese authorities have already launched their most aggressive currency intervention campaign since the dramatic episodes of 2022 and 2024 in 2026. The Ministry of Finance (MOF) has intervened multiple times in the forex market to buy yen and sell dollars – primarily via the Bank of Japan (BoJ) – largely to keep USD/JPY capped near the politically and economically sensitive level of 160. Analysts note that unilateral (non-U.S.-coordinated) interventions tend to buy time rat

The U.S. 30-year Treasury yield has surged to levels not seen in nearly two decades. It briefly topped 5.20% on May 19 — the highest since July 2007 — before easing slightly to around 5.11–5.17%. This sharp move higher in long-term yields is putting immediate pressure on the Nasdaq Composite, the tech-heavy benchmark that has powered much of the U.S. equity rally in recent years. The Nasdaq had shown resilience earlier in 2026 thanks to strong tech earnings (double-digit beat

BoE policy is in a data-dependent holding pattern at 3.75% (unchanged since the Dec 2025 cut). But the market has quietly repriced from “gradual easing” to a mild tightening bias. 50–62 bps of hikes priced by end-2026 (latest OIS reads show ~60 bps as of this week, down slightly from 70 bps post-April MPC but still a sharp reversal from cut-heavy pricing earlier in the year. Catalysts ahead include: June BoE rate decision, May CPI, labor market data, crude oil developments, a

Rising gilt yields are driven heavily by higher term premium from UK political instability (Starmer/Labour leadership crisis after poor local elections, fiscal credibility concerns, potential policy shifts) and sticky inflation risks (energy pass-through from Middle East tensions/oil >$100).Markets interpret this as a risk premium (investors demanding more yield to hold UK debt due to uncertainty), not genuine economic strength. This acts like a “tax” on holding GBP rather th

Front-end volatility tenors are reaching the lowest levels this year; EUR/USD 3m implied vol at 5.7% is close to the bottom of its 5-year range. The same trend is seen in the rest of the G10, as some tenors hit the lowest since 2020. This decline comes after earlier 2026 spikes in volatility (geopolitics, oil shock fears Feb-Mar) but has since reversed on ceasefire hopes, stable central-bank outlooks, and surprisingly low realized movement in major pairs (exactly as in the 1M

Our base case would be that BoJ FX intervention in the current environment can at best put a lid on USD/JPY in the 162/165 area rather than turn the trend. Taking into account high energy prices and Japan running substantially negative real interest rates, plus the dollar being in demand, Tokyo cannot expect a sustained drop in USD/JPY. A joint US-Japanese intervention to sell USD/JPY would be far more significant than solely Japanese intervention. Here, not only would Washin

The US Dollar Index (DXY) has a well documented seasonal tendency to weaken in April and then rebound in May. This opens up a traditional “upside seasonal” window from late April through the end of May, during which the greenback has historically seen positive average returns in most years. The pattern is one of the more consistent in FX seasonality studies and is seen across multi-decade datasets. What's behind the upside? April weakness frequently leaves the dollar oversold

The RBA's Monetary Policy Board increased the target for the official cash rate by 25 basis points to 4.35% (effective 6 May 2026). This marks the third straight 25bp hike in 2026 (following hikes in February and March). Inflation: The headline CPI is now forecast to reach a peak of 4.8% in mid-2026 (higher than in the February projection). The underlying inflation rate (trimmed mean) is expected to remain above 3% until mid-2027, before easing back towards the target band of

Below you will find the historical cumulative performance of a G10FX momentum factor benchmark index during the first quarter of 2026. The benchmark is rebalanced monthly; this quarter it mainly shifted positions in the long leg side of the equation while the short leg ranking held steady. Over the 77 trading periods, the total return was 1.09%, holding onto gains despite the Middle East tensions. Gains above 2.0% were reached before the middle of March, when the strategy pos