Focus - Currency Matters May 2023

Central bank rate change divergence is likely to build over the summer. The RBNZ meets o/n and it will be interesting to see if they push rates higher again or pause. The USD is holding steady or gaining against core currencies at the moment, but a bear trend is expected to reassert itself over the rest of 2023. The JPY remains in focus as EUR/JPY balked at the Y150 probe, but sustained breaks higher would open up Y160/Y170 risk and likely lift USD/JPY back through Y140 for Y150 levels. We lean to a stronger JPY instead, but these are big levels in play.