Forex Ignores Central Bank Hawks, Favouring Oil Exporters

Rising oil prices and doubts over broad monetary tightening have pushed markets to favour currencies of oil exporters, supporting the US dollar in some trades even as risk assets hit record highs. Major banks (JPM, Deutsche, Pioneer, Amundi) recommend buying the Norwegian krone, Australian and Canadian dollars versus major safe-havens (JPY, CHF, USD/EUR). The ECB is expected to pause while signalling possible hikes; Citi warns Brent could average $130/bbl in Q2 if disruptions persist. The BoJ’s hawkish shift — inflation upgraded to 2.6% and three of nine Policy Board members voting to lift the overnight rate (0.75%→1% proposal) — has allowed USDJPY bears to push back, giving medium-term support to the yen alongside government verbal interventions. Overall, the interplay of an oil rally, central-bank rhetoric and equity strength is creating divergent FX moves, benefitting commodity-linked currencies while adding volatility to USD/JPY.