Commodity Currencies up, USD down on IMF Forecast Upgrade

Note  The table above is updated before publication with the latest consensus forecasts. However, the text charts are prepared ahead of time. Therefore there can be discrepancies between the forecasts given in the table above and in the text charts. 

Rates as of 0500 GMT

Market Recap

USD JPY down, commodity currencies up a typical riskon day, but not particularly in the stock markets, where the SP 500 and NASDAQ both closed down marginally 0.15 and 0.1, respectively. 

What drove the market? Hope, basically. The International Monetary Fund IMF raised its forecast for global growth this year to 5.5 from its previous forecast in October of 5.2. This modest increase masks a larger change in the sources of growth, namely they upgraded their forecast for US and Japanese growth and downgraded their forecasts for the Eurozone and UK. They raised their US growth forecast to 5.1 from 3.1, and even thats before taking into account President Bidens proposed 1.9tn stimulus package which they estimate would add another 1.25 percentage points to the growth rate, apparently. The Japan forecast was also revised upwards by 0.8 ppt to 3.1, thanks to that countrys stimulus package. But the Eurozone forecast was cut by 0.5 ppt to 4.2, while the UK forecast was cut 1.4 ppt to 4.5. 

Historically, forecast growth differentials have been a major determinant of currency movements for EURUSD, not so much for GBPUSD or USDJPY, though. However all these relationships broke down in March,…

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