There’s money to be made in currencies whose central banks will make an unpredictable move next year, said David Bloom, HSBC’s global head of foreign exchange strategy.
His call for 2018? Bet on the Aussie dollar. Speaking to CNBC Thursday, Bloom predicted the Australian dollar will gain around 10 percent on the U.S. dollar over the next year following a Reserve Bank of Australia (RBA) interest rate hike in the first quarter of 2018.
He described many central banks’ practices of forward guidance — calling their interest rate decisions weeks or months in advance — as creating exaggerated calmness and low volatility, and projected that countries where forward guidance isn’t in play will be where the excitement is for 2018.
“What we’re saying is, where is the central bank not going to have forward guidance? Where’s the central bank just suddenly going to go ‘we’re going to raise rates’? Where is the central bank denying — and then going have to face — the reality? And we think one of those is Aussie.”
