In his weekly blog for FX-MM, Naam examines why economic growth in the US, and the subsequent deferral of the first interest rate hike, constitutes a favourable environment for emerging and commodity currencies. This – combined with a rebound in commodity prices and an improvement in China’s economic situation – meant the New Zealand dollar, Australian dollar and Norwegian krone all recorded sharp increases of 4% last week.
Meanwhile, sterling was penalised by the deterioration of some key economic data released over recent days,
including the minutes of the Monetary Policy Committee (MPC) meeting, which were more dovish than expected. In this context, Naam’s expectations are that the first hike in the bank rate will occur at the start of 2017.
To read Naam’s blog, please click here