The currencies to bet on this year

The Swiss franc should prove a decent bet this year

published 17 January 2020

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”.

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Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.