Economists at the Bank of America Global Research analyze how the balance of payments dynamics will impact a basket of currencies next year. In their view, the likes of the Euro, the British Pound and the New Zealand Dollar are the most vulnerable to these dynamics. 

Balance of payments dynamics will be supportive for AUD and NOK

“In recent reports, we have discussed the potential areas of concern, which we think will be an important theme for FX. One key area, which we will be focusing on is the balance of payments dynamics.” 

“The impact of rising energy costs and the relative speed of central bank policy normalization has affected both sides of the balance of payments ledger. We looked at how this may impact the G10 FX landscape over the coming year and conclude that balance of payments dynamics will be a headwind for the likes of EUR, NZD and GBP, whilst supportive for AUD and NOK.”