Currency Volatility is Back - And it's Here to Stay

In this episode of the Macro Matters podcast by Millennium Global, Abigail Cushing and Mark Astley discuss the latest Bank of International Settlements (BIS) Triennial Central Banks Survey and how the key takeaways translate to the year ahead in currency markets.

Discussion points:

01:41 - So, Mark, for the benefit of our listeners who may not have had the pleasure of going through it in its entirety, what in your mind are the key takeaways from this year's report?

06:09 - Those are some interesting developments and I think shed some light on key trends we might expect to continue in the coming months and years. Let's focus on last year; 2022 was an extraordinary year for financial markets, to say the least, and no less so for foreign exchange. Why was last year such a standout year for currency markets?

09:27 - That's a very different landscape than what we've seen in some time. It sounds like from what you're saying, what we experienced last year was not merely a phenomenon and now we'll return to the smoother environment we've generally seen in the years since the financial crisis, but, that we should expect this wild ride in currency markets to continue. Can you expand on that?

12:33 - So what have we learned, as investors lick their wounds from what was for many a painful year and start planning for 2023 and beyond, what lessons should be applied? Are the rules of the game different now? And if so, how do institutional investors account for that in their portfolios?

17:36 - Those are some helpful points on how investors might think about navigating the year ahead. Still looking ahead, what are the biggest risks in your view, to the now seemingly priced in Goldilocks scenario where the Fed can engineer a soft landing, inflation goes back to 2% without a hugely disruptive hit to growth and global equity and bond markets begin a sustained recovery. Are we going to be that lucky?

20:15 - If you could leave investors with one piece of advice, Mark, what would it be?

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