Forex Ignoring Central Bank Hawks to Favor Oil Exporters

The piece argues that a rally in oil prices and limited follow-through from other central banks’ hawkish talk are supporting the US dollar and currencies of oil exporters. Brent and WTI gains—driven by tensions around the Strait of Hormuz—are cited alongside a Citi forecast that Brent could average $130/barrel in Q2 if disruptions persist. Banks (JPM, Deutsche, Pioneer, Amundi) recommend long positions in commodity-linked currencies such as the Norwegian krone, Australian dollar and Canadian dollar. At the same time, the Bank of Japan’s hawkish shift (inflation revised to 2.6% and more Policy Board hawks) has supported the yen and contributed to a retreat in USD/JPY. Overall, the author sees central-bank passivity plus the oil rally as net supportive for the dollar and for oil-exporting FX, while equity strength limits safe-haven dollar flows.