The currencies to bet on this year

Are the stars “aligned for the dollar to weaken” this year? Standard Chartered, quoted by Bloomberg News, thinks that “trade war de-escalation and improving global liquidity” should drive down the greenback. Yet Amundi Asset Management points out that US assets still have a “yield advantage” compared with those in other major developed economies, which should prevent a “major dollar sell-off”. That yield difference may also cap any euro rally (eurozone interest rates are negative), says Romain Cabasson of AXA Investment Managers. AXA tips the Canadian dollar as a good “upside” bet for those who are feeling optimistic.  

Another safe-haven currency, the Swiss franc, is riding high. It returned to 2017 highs earlier this month. The Swiss National Bank is under growing pressure from disgruntled savers to end its -0.75% negative interest rates, notes John Revill for Reuters. Yet that could trigger a swift appreciation, which would be bad for the country’s exporters. A better safe-haven might be the Japanese yen, reckons Christian Nolting of Deutsche Bank Wealth Management. The currency is a good “portfolio diversifier” in a year that may see the return of market volatility. Finally, Barclays puts in a word for sterling. Despite its recent rally, the pound remains “undervalued”. It currently trades at $1.30, but should rise to “around $1.35”.