FX and Oil Market Outlook (with Joumanna Bercetche)

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ANZ 8.0
Investment Bank $800.00B
Mahjabeen Zaman 7.5

FX and Oil Market Outlook (with Joumanna Bercetche)

dxy

We can't forget that US policy uncertainty in 2025 particularly has been a creed driver of U.S.D. weakness... there is a bit of a push and pull, but bottom line and if as long you have US policy uncertainty. There will be a little bit of that sort of downward pressure on the dollar we think.

2/2/2026 5:53:19 AM	long term down	62 days later	+2.61%	-2.61%
11/27/2025 9:58:08 AM	medium term cautious down	20 days later	-1.04%	+0.52%

yields

For us we are still expecting three Fed cuts to resume at the second half of the year and beyond.

Asks about risk positioning ahead of weekend talks and portfolio de-risking.

Joumanna Bercetche
Mahjabeen Zaman

This week saw weaker dollar on ceasefire headlines - unwinding positioning rather than risk-on shift given uncertainty. Bottom line for dollar is Strait of Hormuz reopening and oil supply returning.

If oil prices remain sustainably higher next couple months, different story.
Asks why dollar struggled after initial safe-haven status.

Joumanna Bercetche
Mahjabeen Zaman

US policy uncertainty in 2025 driving USD weakness; US economy has challenges; still expect 3 Fed cuts in H2; fiscal outlook not amazing especially defense spending.

Push and pull, but policy uncertainty creates downward pressure on dollar.
Asks why expect 3 Fed cuts when market prices barely one, given inflationary pressures from oil shock.

Joumanna Bercetche
Mahjabeen Zaman

This is a supply shock; headline inflation will pick up but wages show disinflationary trend. Fed will look through - previous oil shocks show headline inflation stabilizes after a year.

Oil prices don't sustainably stay high long in oil shock; demand story comes into play and prices stabilize at lower levels, maybe higher than pre-conflict but not sustainable at $100+.
Asks about BOJ reaction to energy shock: growth or inflation impact top of mind?

Joumanna Bercetche
Mahjabeen Zaman

Inflationary impact top of mind but Japan imports 90% energy, knows how to manage risks. Import inflation picking up impacts yen.

Even taking away supply shock, demand-driven inflation picking up in Japan, wages up - points to BOJ hiking at upcoming meeting.
Asks where dollar-yen headed coming months.

Joumanna Bercetche
Mahjabeen Zaman

Near term, dollar firmness may continue few weeks, dollar-yen moving higher. Yen weakness from negative terms of trade shock.

Intervention unlikely soon unless speculative flows; need to differentiate if move from macro fundamentals like import costs/energy-driven inflation.

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