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FX Weekly - Energy prices back in focus

The euro’s sensitivity to energy prices has shifted, but the recent rise in energy prices has again weighed on the currency. Financial markets are testing how far the authorities will tolerate yen weakness. The Reserve Bank of New Zealand raised rates by 25 bp and signalled that further rate hikes are likely.

FX Weekly - Heightened risk of intervention in the yen

Option-market signals suggest EUR/USD may struggle to stay below 1.1350. USD/JPY was near multi-decade highs and this raises intervention risk. The market is long dollars and heavily short yen, making a sharp reversal possible. EUR/USD forecasts trimmed slightly. We still expect dollar weakness, but now see EUR/USD at 1.18 by end-2026 and 1.23 by end-2027.

Spotlight - Oil’s bearish turn premature, but worst looks behind us

Oil prices have fallen sharply, but current levels appear low relative to tight physical market conditions. Inventories remain low, while summer travel and refinery activity should support oil demand. Supply is expected to recover next year, while demand growth should be limited by ongoing decarbonisation in transport. Our new end-year forecasts are USD 80 per barrel for Brent and USD 75 for WTI; for end-2027 we expect USD 70 for Brent and USD 65 for WTI.

FX Weekly - Dollar rally masks lingering risks

The dollar rally has been driven mainly by a reassessment of the Fed outlook. Markets may have gone too far in pricing in Fed rate hikes; we still expect rate cuts. Extreme positioning in sterling and yen increases the risk of sharp currency moves. Dollar strength may continue over the summer, but US risks could return to focus after the holiday period.

Top of Mind - UK & BoE outlook post-Makerfield

Andy Burnham won the Makerfield by-election, and he will now almost certainly go on to enter Number 10 Downing Street. What would that mean for the UK economy and for interest rates? In this Top of Mind call, Bill Diviney takes stock of both the election and Thursday’s Bank of England meeting, with an update on our latest expectation for the economy and monetary policy. Larissa Fritz then discusses the impact on gilt markets, while Georgette Boele discusses the outlook for sterling.

FX Weekly - Dollar risks move back to centre stage

Markets are refocusing on rate spreads, real yields and US structural risks as oil-price concerns fade. A Warsh-led Fed could raise policy uncertainty and add to the risk premium in Treasuries. Fed/ECB divergence supports our view that EUR/USD can move towards 1.20 by year-end. US fiscal and external vulnerabilities point to further dollar weakness over the medium term.

Top of Mind - A new chapter for the Fed

Kevin Warsh is about to chair his first FOMC meeting, after being confirmed against a political background. Warsh inherits a difficult policy environment where the US is hit by three concurrent shocks: tariffs, the energy supply shock and the AI investment boom. These shocks put pressure on his ability to pursue his goals. In this webinar, Rogier Quaedvlieg, Larissa de Barros Fritz and Georgette Boele will walk you through their assessment of the Warsh’s likely policy aims, as well as their feasibility given current economic constraints. They will also discuss the potential implications for rates and the dollar.

US and Iran strike a deal - What’s next?

FX Weekly - Sterling and euro under pressure

Sterling and euro both fell versus the US dollar this week. Energy prices drove much of the move. UK politics may raise short-term volatility in sterling. But fiscal clarity could support sterling. Higher US yields have supported the dollar.

ESG Economist - Renewables are at crossroads

Costs for onshore wind and solar PV have significantly decreased over the past decade but have stabilized recently, while CCS, battery storage, and hydrogen remain relatively expensive. Grid congestion, curtailment, and lower capture prices are becoming key bottlenecks. Batteries are essential for addressing grid constraints and renewable intermittency, enabling energy storage, grid stability, and improved project economics. Oversupply in battery production has resulted in significantly lower prices, but as demand and material prices rise, upward pressure on prices may emerge. The focus is moving from renewable capacity expansion to system integration, requiring investments in storage, grids, and flexible infrastructure for a resilient energy system.