Given the important developments in the global economy over the past month, we have changed a number of our forecasts. These are published on Barclays Capital Live as they were needed for the EM quarterly. We will discuss them in greater detail in our G10 quarterly (published Thursday).
| Forecasts | Forecast vs Outright Forward | |||||||||
| Spot | 1 Month | 3 Month | 6 Month | 1 Year | 1 Month | 3 Month | 6 Month | 1 Year | ||
| EUR/USD | 1.37 | 1.33 | 1.25 | 1.35 | 1.40 | -2.7% | -8.5% | -1.2% | 2.4% | |
| USD/JPY | 76.6 | 75 | 75 | 78 | 80 | -2.0% | -2.0% | 2.1% | 5.1% | |
| GBP/USD | 1.57 | 1.56 | 1.51 | 1.61 | 1.65 | -0.4% | -4.1% | 2.5% | 5.2% | |
| USD/CHF | 0.89 | 0.90 | 0.96 | 0.93 | 0.93 | 1.7% | 8.4% | 4.9% | 5.8% | |
| USD/CAD | 0.99 | 1.00 | 1.00 | 0.97 | 0.95 | 0.7% | 0.6% | -2.6% | -4.8% | |
| AUD/USD | 1.03 | 1.05 | 1.10 | 1.15 | 1.15 | 2.7% | 8.3% | 14.3% | 16.2% | |
| NZD/USD | 0.82 | 0.85 | 0.86 | 0.87 | 0.89 | 3.5% | 5.2% | 7.1% | 11.0% | |
| EUR/JPY | 105 | 100 | 94 | 105 | 112 | -4.7% | -10.3% | 0.9% | 7.6% | |
| EUR/GBP | 0.87 | 0.85 | 0.83 | 0.84 | 0.85 | -2.3% | -4.7% | -3.6% | -2.6% | |
| EUR/CHF | 1.21 | 1.20 | 1.20 | 1.25 | 1.30 | -1.1% | -0.8% | 3.6% | 8.4% | |
| EUR/SEK | 9.10 | 9.25 | 9.40 | 9.10 | 8.80 | 1.5% | 2.9% | -0.7% | -4.5% | |
| EUR/NOK | 7.75 | 7.80 | 7.85 | 7.75 | 7.60 | 0.5% | 0.8% | -0.8% | -3.5% | |
The changes reflect our view that the euro area crisis is likely to intensify until we see more resolve from European authorities. Judging when this will be is difficult, but we think over the next three month, the EUR and European currencies are likely to be impaired by a higher risk premium. However, we do not expect this to be accompanied by a global recession. Consequently, we expect non European currencies to outperform European currencies over the next quarter. Within Europe, we expect GBP to perform most strongly and the SEK (a small open economy which needs liquidity) the least strong.
Longer term, further QE from both the Fed remains a distinct possibility. This would be an important negative for the USD and an important positive for risk appetite. Because of this, we look for all risky currencies to outperform the USD in 6-12 months time, and for the USD to outperform the JPY.
BARCLAYS CAPITAL GROUP