History suggests readiness for the ECB to react to higher energy prices despite limited signs of broader inflation pressures. While inflation had broadened a lot in 2022, when the ECB hiked rates, the same cannot be said about the hikes in 2008 ahead of the global financial crisis and in 2011 in the middle of the euro-area debt crisis. While we are on the verge of moving our baseline ECB hikes from 2027 clearly forward, we have not done so yet. We still tend to think it would

The outcome of this meeting reinforced our long-held view that the easing cycle will end at 6.50%, with the timing of the final cut dependent on the duration of the conflict. The combination of weak domestic demand, still-contained underlying inflation pressures, tighter financial conditions, and a still strong peso, supports completing the cycle. Moreover, inflationary pressures in Mexico should be more contained than in most countries, as higher gasoline prices are unlikely

A breakthrough the 160.0 level is holding on Friday into close. Here's a summary of USD/JPY recent performance: This Week (5-day): +0.43% to +1.69% This Month (March 2026): +2.47% to +2.86% (average rate ~157.61) Year-to-Date (2026): +2.13% to +2.90% 52-Week Range: 139.89 – 160.41 (currently near the all-time 2026 high) 2026 YTD High: ~159.90–160.41 (reached mid-March) 2026 YTD Low: ~152.46–152.69 (late January) Upper 21d Bollinger band caps upside at 160.36 USD/JPY remains s

March has proven to be a challenging month for both equities and bonds, leading to increased alerts from trading desks regarding potential USD buying signals across the G10 currency bloc. The situation has been particularly precarious for the Euro (EUR) and the Japanese Yen (JPY). The Eurozone's reliance on energy imports makes the Euro especially susceptible to fluctuations in energy prices, which can be exacerbated by geopolitical tensions and supply chain disruptions. This

Over 20 years of historical data, AUD/USD has shown clear seasonal tendencies. April stands out as the top-performing month on average, followed closely by March. This aligns with broader long-term patterns (back to the 1970s) where AUD often benefits from commodity flows, risk sentiment, and end-of-Q1 rebalancing. Looking at the last 20 years, AUD/USD has risen 0.83% on average in April; this has a 53% win ratio. The March-April window holds the best stats for AUD/USD upside

The oil plunge is triggering a textbook relief rally across cross-asset markets today. Brent crude is down 10-14% (hovering ~$99-100 after briefly dipping to $96), WTI ~8-11% lower around $88-90. This stems directly from Trump's announcement of "productive talks" with Iran and postponement of strikes on energy infrastructure/Hormuz threats—easing immediate supply shock fears that had priced in a $7-10/bbl geopolitical premium earlier. Equities: Strong rebound. Dow surging 600

Implied volatility in both currency and interest rate markets has increased somewhat during March, but not nearly to the extent that the current geopolitical situation might justify. Much of the market movement so far appears to reflect position adjustments rather than a broad shift towards risk-off sentiment . Since early March, the most pronounced equity declines have been observed in markets that had previously seen the strongest gains, including the Japanese Nikkei index

Many major equity benchmarks slipped into correction territory last week. Japan, Europe, EM and Sweden are all down at least 10%, while the US is about 5% lower. For global portfolios, US resilience is a relief; the scale of central-bank repricing and energy prices could easily have left global equities in a worse place. However, for investors in Europe it removes a potential source of positioning support that might otherwise help a rebound. Our correction monitor is still no

The dominant theme this month has been geopolitical shock from the Middle East conflict (Iran-related tensions and Hormuz Strait risks). This triggered a massive oil spike, risk-off flows, a firmer USD, and mixed safe-haven behavior (JPY underperformed as a haven, gold weakened on stronger dollar + inflation fears). The table below shows month-to-date cross-asset movers. Oil-supply-driven fears pushed Brent crude near $120/bbl before pulling back to shy of $100/bbl; we had no

RBA: Analysts expect a 25bp hike to 4.10% (from 3.85%), with ~65–80% market probability, driven by persistent inflation and energy price surges. 23/30 economists polled by Reuters anticipate the move, though some see a hold if data softens. Press conference with Governor Bullock key for future signals BoJ: Expected hold at 0.75%, but ~60% chance of signaling a hike by June (to 1.00% end-2026). Analysts note ongoing normalization amid wage growth, though energy shocks could de

The USD/JPY is flashing bullish seasonal signals from here to April, both present among the highest win rate ratios in the calendar year. In fact, the January to April period is the strongest seasonal window for the dollar to rise against the yen, looking back at the past 20 years. The upside is supported by fiscal year-end demand. The pair has been in a clear ascending channel since mid-February lows (~154–155 zone), printing higher highs and higher lows. Momentum remains up

As of March 11, 2026, the national average price for regular unleaded gasoline stands at $3.578 per gallon — the highest level since mid-2024. That’s a blistering +21.8% month-to-date surge from ~$2.937 just one month ago (and roughly +50–55 cents in the past 10 days alone). Weekly jumps of 27–49 cents have been the largest seen since the early days of the Russia-Ukraine war or Hurricane Katrina. February CPI (released this week) looked tame: headline +2.4% y/y, core +2.5% y/

Our own momentum factor is holding gains in the month of March. The basket is a diversified carry expression as it holds long aussie, kiwi and franc. On the short side of the equation, we have the dollar, the yen, and the euro. Momentum is doing justice to its past record of outperformance to other strategies, despite the spike in risk premiums, which I would have expected to hurt the kiwi and aussie longs. Shorting the yen and the euro and long Aussie have been the largest c

This week's dollar rally is taking most G10 currencies down as volatility spikes push flows into safe-haven assets. It's interesting to see both CHF and JPY, textbook low-risk currencies, fall to the dollar despite the escalation of tensions in the Middle East. Past vol spike episodes have seen both the franc and the yen outperform the dollar. Other assets like gold are barely working as the spot market posts losses and Treasuries remain offered this week. So where is this re

Rate differentials still matter (positive slope), but geopolitics, oil, and risk sentiment are dominating right now—pushing the correlation down from historical norms. In calmer times (no wars or shocks). Currently, the slope in the relationship of G10FX pairs vs policy rates stands at around 0.44, in less geopolitically turbulent times, we could see this strengthen up to 0.55.

Here's a table summarizing the approximate 120-day beta (sensitivity) of major G10 currencies to Brent crude oil prices, based on daily close regression analysis over the last 4 months (roughly Nov 2025 to early March 2026). Beta here measures how much the currency pair (or index) moves for a 1% change in Brent crude—positive beta means the currency tends to strengthen when oil rises (commodity-linked positive exposure); negative means it weakens or inversely correlates (e.g.

Japan has one of the highest exposures to crude oil price fluctuations among major economies, primarily because it is almost entirely dependent on imports for its oil needs and relies heavily on oil in its energy mix. This vulnerability is amplified by heavy concentration in Middle East supplies, making it particularly sensitive to geopolitical disruptions (like the current US-Israeli strikes on Iran and risks around the Strait of Hormuz). The most recent metrics show that oi

An FX carry trade is when you borrow (funding) a low-yielding currency to buy a high-interest currency (target) to exploit the carry or rate differential in the exchange rate. This trade works as long as there is low volatility and the spot does not move against you dramatically. Volatility spikes can cause global portfolios to trim risk and move money back into funding currencies. That is why carry trades are mostly considered a "risk on" strategy. The MXN/JPY carry trade (l

Global reserve trends showed gradual USD share erosion (e.g., IMF data on dollar dipping in reserves), with some diversification into gold, euro, or yen amid geopolitical/trade noise. The USD posted losses against all major currencies in 2025; the chart below shows the EUR/USD rising (dollar weakness) from near parity to breaching 1.20 in 2026. A Reuters note reported the ECB reducing its USD exposure in early 2025. The piece reports that the European Central Bank sold a smal

The 2s10s curve un-inverted around late August 2024 and has since steepened significantly—reaching 74bps in spots by early 2026-reflecting Fed easing, softer short rates, and markets pricing in moderate growth with some term premium returning on the long end. However, in very recent weeks, there's been some bull-flattening chatter: longer-dated yields (like the 10-year) have fallen faster than shorter ones amid safe-haven flows, PPI surprises, geopolitical risks (e.g., Iran/C