Will China’s Reopening Prove a Boon for the Australian Dollar (AUD)?
The reopening of the Chinese economy could help to bolster the Australian Dollar (AUD) in 2023. However any gains for the ‘Aussie’ could prove limited if Chinese Covid case levels continue to soar.
A more dovish Reserve Bank of Australia (RBA) could weigh on the Australian Dollar in 2023. The Australian economy has shown signs of slowing in the second half of 2022 which may lead to lower inflation. This could in turn prompt fewer rate hikes from the RBA.
Is the New Zealand Dollar (NZD) Vulnerable to an Economic Downturn?
The New Zealand Dollar (NZD) could struggle in the coming months amid as the Reserve Bank of New Zealand (RBNZ) has forecast a sustained slump in domestic growth will plunge New Zealand into a recession in 2023.
Elsewhere the ‘Kiwi’ will remain sensitive to commodity price movement as well as the reopening of China, which is a key trading partner for New Zealand.
Will Poor 2023 Outlook For UK Weigh on Pound (GBP)?
The Pound (GBP) could face an uphill battle through 2023 amid a gloomy outlook for the UK economy. A key focus for GBP investors in the coming months will be on the depth of the UK’s current recession. Signs of a prolonged downturn will no doubt drag on Sterling sentiment.
The Bank of England’s (BoE) exit from its current tightening cycle will also be in the spotlight for GBP investors. Economists speculate the BoE may call time on its interest rates at its first meeting of 2023, which could take a significant toll on the Pound.
Could Euro (EUR) Find Support From Hawkish ECB Rate Hikes?
The Euro (EUR) is likely to remain highly sensitive to headlines pertaining to the war in Ukraine throughout 2023. The prospect of a new Russian offensive could infuse some notable volatility into the single currency at the start of the year.
On the other hand, the European Central Bank’s (ECB) commitment to continue raising interest rates through at least the first half of 2023 could act as a key pillar of support for the Euro. Although this could be thrown off by a Eurozone recession at the start of the year.
Could Further Interest Rate Hikes from Fed Boost US Dollar (USD)?
Fears of a global economic downturn and heightened geopolitical tensions could underpin support for the safe-haven US Dollar (USD) in 2023. If the US economy manages a to stick a soft landing in the coming year, then it may also bolster confidence in USD.
The Federal Reserve’s monetary policy could also boost the US Dollar if they remain hawkish in 2023. Fed Chair Jerome Powell signalled last month that the bank’s terminal rate may be higher than previously forecast.
Could Canadian Dollar (CAD) See Further Losses amid Oil Volatility?
The fortunes of crude oil are likely to continue to drive movement in the Canadian Dollar (CAD) in 2023. Russia’s invasion of Ukraine could continue to drive volatility in the price of oil, as well as the reopening of the Chinese economy.
The Bank of Canada’s (BoC) path of monetary policy tightening could bolster CAD in 2023. With the International Monetary Fund (IMF) predicting a 4.2% rise in Canadian inflation, the BoC could be forced to enact larger rate hikes.