AMERICAS We are bullish on the outlook for the USD. Renewed equity market volatility remains a threat to growth prospects and may therefore weigh on the Fed policy outlook. We think March remains “live” for a further rate increase at this point. Steadier oil prices will help stabilize the CAD and MXN. The BRL, while supported by high interest rates, is vulnerable to political risk outflows. 

EUROPE The euro zone/US policy divergence narrative remains alive and we maintain a bearish bias on the outlook for the EUR. We have revised the GBP outlook lower in response to delayed BoE rate hike expectations. A referendum on UK membership of the EU is a key risk on the horizon. 

ASIA-PACIFIC Risk aversion has undermined developing market currencies in recent weeks; the Chinese authorities have stabilized the CNY but equity markets remain weak. The BoJ surprised markets with additional easing steps in January, weighing on the JPY.


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