Currency markets are caught in the crosswinds of slower growth, higher yields/inflation and higher equity market volatility with USD as the clear beneficiary of these forces. Softer growth and shaky equity markets tend to benefit the traditional safe haven currencies such as the US dollar, Japanese yen, and Swiss franc (and to some extent the euro) at the expense of more risk-sensitive, procyclical currencies such as the Norwegian krone and Australian, New Zealand and Canadian dollars. However, during September, rising yields in those procyclical currencies relative to the defensive currencies and strong energy prices offset much of the impact of slower growth.
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