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Currencies Outlook

Carry trades, political risks, and energy prices could shake up sluggish currency markets

Thursday, 17 September 2026, written by Edward Markus

Volatility in the currency markets is low. This increases the appeal of carry trades and their influence on the markets. We do not expect volatility in the currency markets to remain low for long. Higher energy prices and interest rates are having a different impact on the U.S. and European economies, and we expect political risks to increase, particularly in the Eurozone. In this report, we examine which currencies will benefit from this and which will not.

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Previous reports

Yen shakes up sluggish currency markets

Thursday, 03 September 2026

Japan and the U.S. intervened jointly to prop up the yen, with mixed results. Meanwhile, Washington fears that Tokyo may have to sell U.S. government bonds to secure enough dollars, with all the consequences that entails for long-term U.S. yields. You can read about what this means for the yen, the dollar, and other currency markets in our full report.

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Beware of rising real interest rates

Thursday, 20 August 2026

Supply-demand dynamics in capital markets are deteriorating: government deficits and the AI boom are driving up demand for capital, while an aging population and declining confidence in the US are constraining supply. In our latest currency outlook we discuss what this means for EUR/USD and the other major currency pairs.

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FX & Rates | Oil Prices Remain Key for Interest Rate and Currency Markets

Friday, 07 August 2026

Note: This week, instead of separate Currencies and Interest Rate Outlook publications, we're issuing one combined report covering both topics, due to the summer holiday period.

Higher oil prices increase inflation risks and raise the likelihood that central banks will need to tighten monetary policy further. We discuss the implications for U.S. and European interest rates, EUR/USD and the other major currency pairs.

 

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