The US dollar suffered again on Tuesday with investor optimism lingering. Economists at MUFG Bank believe the risk appetite can persist and, subsequently, expect the CHF to underperform while the NOK, the CAD, the GBP and the EUR could catch-up in coming days due to different reasons.
Key quotes
“NOK, CAD (oil-related) and GBP (Brexit) are the three worst performing G10 currencies on a year-to-date basis but given our bullish oil price view and given the likelihood of a UK-EU trade deal in the coming days, we see scope for these underperformers to play catch-up.”
“The Swiss franc is the second best performing currency and if this level of risk appetite persists, is likely to underperform further.”
“EUR/USD correlations with the all other G10 currencies have weakened in recent weeks suggesting some catch-up for EUR is also possible. The COVID-19 specifics for the eurozone and possible contracting euro-zone growth in Q4 may be playing a role.”
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