Swiss Life Asset Managers sees a correlation between currency performance and the progress of vaccination in the developed countries. While the dollar and GBP are strengthening, the JPY, CHF and EUR are losing ground.
Developments in developed-country currencies seem to be linked to the vaccination progress of the respective countries. This is at least the case in the UK, where the rapid vaccination campaign has significantly brightened investor sentiment. Swiss Life Asset Managers expects the UK to grow faster than any other developed market in the second quarter. However, a lot of positive news is already priced into the GBP.
Meanwhile, the USD met Swiss Life Asset Managers’ expectations in the first quarter. In addition to stronger economic growth and an increasing interest rate advantage, the vaccination progress also improved economic forecasts here. However, the main driver is US President Biden’s fiscal package. Swiss Life Asset Managers expects the USD to retain its interest rate advantage and gain further strength.
The safe-haven currencies JPY and CHF continued to lose ground in March. In a departure from convention, the EUR was unable to benefit from this. According to Swiss Life Asset Managers, this is due to the increasingly poorer growth forecasts and the disastrous start to the vaccination campaign in the Eurozone.