A snippet from Barclays outlook for the second half of 2018:
the USD likely to strengthen a little against the EUR and weaken a little against the JPY
- Our year-end forecast for the EURUSD and USDJPY crosses are 1.12 and 107, respectively
The one persistent trend in currencies should be the continued weakness of emerging markets against the USD.
Given the backdrop of rising trade frictions that should disproportionately affect EM, the earlier mentioned rise in US short-term rates, as well as country-specific challenges in some high profile EM economies, EM currencies still do not offer compelling value.
- We expect USDCNY and USDINR to finish the year at 6.6 and 72, respectively.
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An interesting point relevant to the yuan raised by Barclays, and note that the past few days we've seen action from the PBOC to weaken the CNY against the dollar. This is perhaps in response to increasing forceful rhetoric from Trump on imposing trade restrictions on China. Politics to again influence rates ….
