FX and Commodities Monthly Insights - April 2026

• The US dollar strengthened in March (~+2 per cent) supported by its safe-haven appeal, unwinding of previously crowded bearish positioning, higher oil prices, and markets repricing the Fed outlook towards fewer rate cuts. Meanwhile, US inflation remains broadly steady for now despite upside risks, while the labour market is cooling. In terms of monetary policy, the Fed is on hold and our base case remains for rates to stay steady through the year
• Near-term USD support may persist if conflict-related inflationary pressures reinforce a “higher for longer” rates narrative. However, political uncertainty is likely to weigh on sentiment over the medium to longer term, and growth expectations may soften if inflation pressures intensify. We therefore maintain a neutral medium-to-long term view on the USD
• Our preferred alternative in the G10 space is AUD, supported by strong fundamentals, sound fiscal metrics and relatively high yield, with further potential upside from higher commodity prices (industrial metals)
• Other G10: Higher energy prices are a headwind for EUR and GBP. JPY may benefit from reduced political uncertainty and intervention risk, but oil import dependence, low yields and weak fiscal metrics limit upside. CHF faces intervention risk from the SNB to weaken the currency amid higher energy prices and a stronger Franc
• We recently upgraded CAD to neutral and rotated EM exposure: bearish INR, bullish MXN, and neutralised KRW and ZAR, reflecting energy-price dynamics that favour energy exporters over importer

Commodity Space: 

• Bullish on Gold: Despite recent volatility and a sharp pullback, we remain constructive on gold as a portfolio diversifier. The decline may present more attractive entry points for investors seeking a long-term hedge against global risks. In a de-escalation scenario, gold could benefit from renewed USD weakness, lower US yields, and potential growth concerns as inflation pressures re-emerge. US mid-term election dynamics, fiscal considerations, and broader monetary risks should also remain supportive
• Neutral on Silver: Our neutral outlook on silver persists due to significant price swings and limited hedging benefits compared to gold
• Neutral on Oil: Oil rose ~63 per cent in March, its strongest month on record. The Iran conflict has increased the risk of disruption to global energy supply, with key facilities targeted and flows through the Strait of Hormuz closely monitored. Upside risks persist if tensions remain elevated or escalate further, while the primary downside scenario would be a swift resolution that reduces supply-risk and enables a fuller reopening of the Strait, although repairs could take time. Additional downside risk could arise from any easing of Russia-related sanctions that materially increases supply relative to demand