Press Room

FX forecasts and associated rankings are published on behalf of Monex Europe and Monex Canada.

While markets became slightly more navigable in Q4 relative to the turmoil seen in Q2, volatility and tail risk remained abundant. The US election, vaccine optimism and a tightening of lockdown measures were the dominating themes that spurred on volatility in FX markets throughout the quarter.

These drivers ultimately resulted in broad USD weakness towards the end of the year, reinforcing our view of a weaker dollar on vaccine optimism and the resumption of the global economic recovery drawing closer. We expect to see continued USD weakness throughout 2020 on this basis.

Monex Europe ranked 4th in Bloomberg’s G10 rankings out of 52 eligible forecasters in Q4 2020. Notable performances came in EURCHF and AUDUSD forecasts where Monex Europe ranked 2nd and 8th accordingly.


Our assumption of an improvement in eurozone risk appetite on the back of vaccine optimism proved correct in Q4. Markets opted to focus on the improving medium-term growth outlook delivered by constructive vaccine headlines despite subsequent Covid-19 waves forcing many European nations to tighten lockdown conditions again. The vaccine optimism facilitated a marginal unwind in the Swiss franc’s strength, mainly against a surging euro. While the franc still strengthened against the dollar, its move higher was far less aggressive than other G10 peers. Additionally, the US Treasury department’s decision to label Switzerland an FX manipulator did little to rattle FX markets mas punitive actions weren’t likely in the short-run. We continue to see the EURCHF rate climbing higher over the coming twelve-months to the delight of the Swiss National Bank, that is struggling with deflation due to a strong franc, as major economies begin to reopen and the global economic recovery supports risk appetite.

We have been bullish on the Australian dollar for some time now due to Australia’s effective management of the domestic Covid-19 outbreak, which allowed the economy to reopen quicker compared to most G10 peers.

In addition to eliminating domestic outbreaks, strong fiscal and monetary support boded well for the economic recovery and therefore the currency outlook, while a robust recovery in the Chinese economy spilt over into the antipodean nations. In conjunction with our expectation of a downturn in the dollar as risk sentiment improved, these dynamics resulted in a 7% rally in the Aussie dollar in Q4, which aligned with our bullish expectations.


Author: Simon Harvey, Senior FX Market Analyst



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