The currencies to bet on this year

The US dollar could be set to weaken this year, while the euro, Canadian dollar and the Swiss franc could be good bets for optimistic traders.

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”.

Recommended

I wish I knew what bitcoin was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what bitcoin was, but I’m too embarrassed to ask

This week, we explain just what bitcoin is – and why the cryptocurrency is so revolutionary.
25 Jan 2022
Bitcoin is down more than 50% since its all-time high. What is going on?
Bitcoin & crypto

Bitcoin is down more than 50% since its all-time high. What is going on?

Bitcoin, the world's most popular cryptocurrency, is trading more than 50% below its all-time high in November. Saloni Sardana explains why the digita…
24 Jan 2022
The charts that matter: the start of the big crash?
Global Economy

The charts that matter: the start of the big crash?

US tech stocks fell further this week, more than 10% down on their November high. There’s what happened to the charts that matter most to the global e…
22 Jan 2022
US inflation is at its highest since 1982. Why aren’t markets panicking?
Inflation

US inflation is at its highest since 1982. Why aren’t markets panicking?

US inflation is at 7% – the last time it was this high interest rates were at 14%. But instead of panicking, markets just shrugged. John Stepek explai…
13 Jan 2022

Most Popular

Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Three innovative Asian stocks to buy now
Share tips

Three innovative Asian stocks to buy now

Professional investor Fay Ren of the Cerno Pacific Fund highlights three of her favourite Asian stocks to buy now
24 Jan 2022
Temple Bar’s Ian Lance and Nick Purves: the essence of value investing
Investment strategy

Temple Bar’s Ian Lance and Nick Purves: the essence of value investing

Ian Lance and Nick Purves of the Temple Bar investment trust explain the essence of “value investing” – buying something for less than its intrinsic v…
14 Jan 2022