Monthly Currency Outlook - June 2022

Written by George Vessey, UK Currency Strategist 

Highlights include:

US dollar:  Weaker U.S. data gives rise to worries about the economy tipping into recession over the coming year, capping gains for the dollar.
Canadian dollar:  Barring a surprise economic setback, the Bank of Canada appeared on track for big 50 basis point rate hikes in June and July.
British pound:  GBP/USD has yet to break below $1.20, but if global risk sentiment doesn’t improve and recession or stagflation fears come to fruition, this level could become less supportive.
Euro:  Monetary markets bet on a first rate hike in July but a sharp revision of both growth and inflation ECB forecasts released could urge the central bank to start tightening in June.
Japanese yen:  Markets are waiting for two 50 bps rate hikes in June and July in the US, but nothing is certain after that. Any sign of a slow down in the tightening race would boost market sentiment.