Some of the specifics of war in Ukraine means that the winners and losers in the FX space are different than in previous crises, in the opinion of economists at Rabobank. They view the euro as vulnerable and expect the EUR/USD to target 1.10 on a break under the 1.11 level.
Currencies with commodities links to perform well amid Russia-Ukraine conflict
“In the current environment, we expect the commodities currencies to remain well supported.”
“Insofar as the BoJ and the SNB have been actively engaged in dispersing speculative inflows for year through the use of very accommodative policy settings, we favour the USD vs. the JPY and CHF as a safe haven trade.”
“We expect the SEK to remain under pressure vs. the USD as long as the assault on Ukraine continues.”
“The Eurozone maintains a healthy current account surplus and from time to time a debate arises as to whether the EUR could adopt safe haven behaviours. Clearly, this is unlikely at present.”
“In view of the risks to gas and oil supply to Germany, the EUR could find itself stifled by a new wave of growth risks and potentially by increased concerns about stagflation. A break of the recent low close to the 1.11 level would likely focus attention on 1.10.”