FX markets in for bumpy ride over next three months – Reuters poll

“Currencies are in for a bumpy ride with already heightened volatility expected to increase over the next three months in the wake of Russia's invasion of Ukraine,” per the latest Reuters poll conducted during February 28 to March03.

The analysts also forecast “more pain for the battered ruble,” the survey showed.

Key quotes

Volatility spiked on Wednesday to levels not seen since the start of the COVID-19 pandemic, according to Deutsche Bank.

That trend is expected to continue in the near term, with over 90% of respondents to an additional question in the Feb. 28-March 3 poll of currency strategists expecting volatility to either increase or increase significantly in the coming three months.

Median forecasts of over 60 respondents showed little change in analysts' expectations compared with the February poll, suggesting many forecasters have not yet worked out the wider FX market implications of armed conflict in Europe.

The yen and the franc are also forecast to trade slightly lower in a year, and commodity currencies to outshine them.

The Aussie dollar and Kiwi dollar are expected to gain over 2.3% and 6.0%, respectively, and the Canadian dollar over 2.5%.

Asked how low the rouble would fall to this month, 11 strategists returned a median of 125/$. Forecasts ranged from 120-150/$.

The lira was forecast to plunge another 20% in the next 12 months.

Also read: The Russian attack on Ukraine roils the financial markets –Traders move to the safety of US treasuries