![]() Given how undervalued they are, any sign of economic strength in the respective countries could lift the currencies, she said. Jane Foley, head of FX strategy at Rabobank, is upbeat on the currencies of Sweden and Norway. Still, some strategists believe there is plenty of room for the dollar's peers to appreciate further. currency could rebound if inflation proves stubborn, or the Fed is more hawkish than investors had priced in. In addition, betting against the dollar carries its own risks. Strategists, however, cautioned against putting too much stock in valuations, especially for short-term moves, because currencies can often stray from their fair value for months. dollar," said Bipan Rai, North America head of FX strategy at CIBC, who believes the dollar is overvalued against currencies including the Japanese yen, euro and British pound. "Most (valuation models) are screaming over-valuation for the U.S. Deutsche Bank's model shows the Japanese yen - which is off 7% against the buck this year as the Bank of Japan has kept rates ultra-low – to be among the world’s most undervalued currencies against the dollar. "When you think of all the asset classes, the one that did not participate in this exuberance over a soft landing is commodities," Bardas said.Ĭommodity currencies are far from the only way to play further dollar weakness. A hopeful sign came Tuesday, when the International Monetary Fund raised its 2023 global growth estimates slightly. Thanos Bardas, senior portfolio manager at Neuberger Berman, believes the Australian dollar could appreciate if global growth is better than feared and commodity prices rise. ![]() dollar by more than 30%, while the Australian dollar is about 20% from fair value. ![]() Some other commodity currencies have seen similar declines, with the New Zealand dollar down 2% and the South African rand down 3%.Ī Deutsche Bank analysis of currency valuations based on factors including terms of trade and gross domestic product shows the Norwegian currency undervalued against the U.S. dollar this year, the crown is down nearly 3% against the greenback, with analysts pointing to lower energy prices and a central bank that until recently had raised rates at a slower-than-expected pace. The second worst-performing G10 currency against the U.S. While some commodity currencies have enjoyed strong runs against the dollar this year, many bullish investors are looking for winners among the laggards. ![]()
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