Currency Outlook


What happened

  • Greenback reached its strongest levels of 2019 only to see them dwindle in the last day of May
  • Per the Bloomberg Dollar Spot Index, USD rose by less than half a percent after major swings
  • Escalation of trade woes and tariffs lifted safe-haven JPY and CHF by 2.3% on average
  • Theresa May was forced to resign as Prime Minister, Pound slid by 3.2% from the turmoil
  • Euro fought back dollar strengthening at the end and only lost 0.2% of its value in a tough month
  • Commodity prices falling and trade issues unresolved caused MSCI Emerging Market Currency Index to dip another 1.3%

Tempus’ view

  • Expect Pound to continue being all over the place as a new leader is picked in Britain
  • Euro might finally catch its break if indeed data remains steady and Italy cooperates with EU budget rules to avoid economic havoc
  • Tariffs and implementation could actually revive negotiations, put pressure on the buck
  • Canadian Dollar and Mexican Peso are due appreciation if USMCA trade pact is ratified
  • Chances of increased recessionary pressures along with the Fed’s willingness to talk about cutting interest rates could start hurting USD

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