In this episode of the Macro Matters podcast by Millennium Global, we share our Q1 2023 Global Currency & Macroeconomic Outlook. Our Lead Economist, Piya Sachdeva and Analyst, Eve Danbury discuss the macro themes that will matter most in the coming quarter and how these are expected to impact global currencies.
Discussion points:01:11 - First, really, I just wanted to ask you, how are you thinking about inflation and the shift in component contribution to inflation, particularly focusing in the US, which remains the center point of focus for markets at the moment?
03:44 - So, you speak a bit about the concern that the Fed have in terms of possibly over tightening, but ultimately there is that sticky component of inflation, which they do need to tackle. In terms of the tightening already done by the Fed and central banks globally, which is a considerable amount. How much feed through has that been to growth and consumers?
05:03 - And then from that specifically on the Fed, what are your thoughts on how they might be looking at their rate path from here and how do you think they're thinking about the lags to the tightening that they've already done?
09:00 - Just before we turn to currency specifics, I think it's worth just adding a comment on markets more broadly.
10:21 - From a macro eco standpoint, what's your view on the dollar into Q1 next year and how are you thinking about those correlations?
14:43 - How does that translate into your ECB view and is there more to go for them on rate hikes? And then with that, what's your euro view as a consequence for Q1?
17:39 - So sticking with undervalued currencies and arguably flipping to the place that is perhaps the most behind out of everyone in terms of monetary policy, Japan and looking to the yen, it continues to stand out on a valuation basis. But what else leads you to have a more positive view on the currency into next year?
20:08 - What are your thoughts on the pound in an environment where inflation is coming lower?
23:03 - What are your views on the SNB going into Q1 and consequently the Swiss franc from here?
26:53 - Shifting a bit away from correlations to bond prices and rates markets and looking more to the commodity currencies. Both of the G10 commodity currencies, AUD and CAD are acutely sensitive to commodity prices globally, of the Canada obviously specifically oil led. So, the Australian dollar, what are your thoughts around the currency given its overall relationship to risk asset markets?
And then for CAD, for the Canadian dollar, if commodities are set to remain at current levels or possibly lower, as you mentioned, specifically looking at European gas prices, do you see this having a negative effect on the Canadian dollar?
30:17 - You mentioned the commodity price outlook with regards to China, I mean, that's been another huge theme that has gathered pace over the last quarter and certainly looks set to stay at the forefront of investors’ minds going into next year with reopening underway and we're moving away now from from zero COVID policies. How are you thinking about the renminbi as we enter this reopening phase and what do you think this reopening could mean for China's capital inflows?
34:24 - To summarize all our thoughts on the macro environment.
This piece of content contains the views and opinions of our Global Economic Research and Strategy Team as of December 2022 and does not necessarily represent the views and opinions of Millennium Global or any of its Portfolio Managers. This information is intended for Professional Clients only, not retail clients. This information does not constitute an offer to buy or a solicitation of an offer to sell
