MUFG Major Currency Forecasts 2024-2025

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MUFG expects the dollar to gradually retreat once the Fed cuts rates and the global outlook improves. EUR/USD is forecasted to strengthen to 1.14 at the end of 2024 with USD/JPY weakening to 134. GBP/USD is expected to strengthen to 1.31 on a 12-month view. Commodity currencies will gain traction once the Fed embarks on an easing cycle. MUFG expects the dollar will gradually lose ground once the Fed starts cutting rates and now expects a first rate cut in May. The bank expects the BoE to cut rates in May or June, leading to a reversal of GBP outperformance. The Euro to Pound (EUR/GBP) exchange rate is forecasted to edge higher to 0.87 by year-end. MUFG expects the RBA to be slow to cut rates, providing support for the AUD before advancing later in the year. The RBNZ is likely to react earlier to cut interest rates given domestic recession risks. MUFG also expects lower Canadian interest rates, with USD/CAD forecasted to drift lower over the second half of the year. The Norwegian and Swedish currencies are expected to make further net headway, but there are important two-sided risks. Tensions in the Middle East are supportive for the price of oil and the Norwegian krone. The Riksbank buying has provided additional support for the Swedish krona, but that is likely to ease soon.

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https://www.exchangerates.org.uk/news/40028/2024-02-05-mufg-major-currency-forecasts-2024-2025.html