G10 commodity currencies underperform as banking fears intensify. Risks remain tilted to the downside the in near-term, economists at MUFG Bank report.

Evidence of stronger China demand needed for support

“We believe that risks remain titled to the downside for G10 commodity currencies in the near-term.”

“We do not expect banking fears to blow over quickly and they pose downside risks to global growth through tightening credit conditions. Nevertheless, it is premature to rule out a boost for commodity currencies later this year from a stronger than expected pick-up in demand from China.”