HSBC economists are considering various possible scenarios that could occur and what this could mean for G10 currencies. A U-shaped recovery is the most likely case.
“L-shaped: the global economy fails to rebound even after the relaxation of COVID-19 containment measures. The FX is driven by the relative health of the external positions. Winners: JPY, CHF, gold, losers: AUD, NZD, GBP. ”
“U-shaped: recovery does not happen immediately. The FX is driven by the relative health of public finances as the markets seek a policy to achieve recovery. Winners: USD, JPY, AUD, NZD, Losers: EUR, CAD, GBP. ”
“V-shaped: a rapid and healthy rebound in growth. “Risk on-Risk off” is always dominant, the previous FX losers becoming the winners. Winners: AUD, NZD, CAD, losers: gold, USD, JPY, CHF. ”
“！ -Form: prolonged slowdown in growth, possibly caused by a second wave of containment measures. A “risky” mood would ensue. Winners: gold, JPY, USD, losers: CAD, AUD, NZD. “