In the opinion of economists at UBS, investors can seek to benefit from the diverging pace of central bank rate rises and its impact on foreign exchange rates. Consequently, the US dollar, the British pound and the Australian dollar are their preferred currencies.
Chinese yuan to weaken moderately against the USD
“The US Dollar Index has climbed by 3.6% so far this year amid expectations that the Fed will tighten policy faster than the ECB and Bank of Japan. We also like the British pound and the Australian dollar, given that their central banks are in the vanguard of the tightening cycle.”
“The Swiss franc and the euro are our least preferred currencies. We also expect the Chinese yuan to weaken moderately against the USD amid diverging US-China monetary policy dynamics.”