At Any Rate Global FX: Bearish USD vs. EM FX risk appetite index, G10 cyclicals and the Fed
Jan 23, 2026
Patrick Locke, a U.S.-focused FX strategist on Fed and Canada policy; James Nelligan, a Europe FX specialist on sterling and Scandi moves; Anezka Christovova, EM technicals and risk appetite expert; Arindam Sandilya, Asia FX strategist on CNY and BOJ risks. They discuss a bearish dollar backdrop, EM risk appetite extremes, USD/CNY dropping below 7.0, Scandi and sterling rallies, and intervention risks for the yen.
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Pro-Cyclical Backdrop Favors Cyclical FX
- Meera Chandan argues we are in a pro-cyclical, low-volatility environment driven by fiscal and monetary easing.
- She concludes this backdrop favors cyclical currencies and a weaker dollar unless the Fed reintroduces hikes.
EMFX Risk Appetite At Extremes
- Anezka Christovova's EMFX risk appetite index is in extreme positive territory, historically preceding reversals.
- She warns technical overbought signals and mean reversion in global activity could prompt a pullback in EM FX.
USD/CNY Break Below 7.00 Matters
- Arindam Sandilya highlights the symbolic move of USD/CNY fixing below 7.00 for the first time in three years.
- He sees exporter conversion plus rising foreign equity inflows supporting a continued CNY appreciation path.