There is a growing expectation that the US yield curve is set to steepen again. If it does, how will the FX market perform? In this article, I analyse historical trends to argue that the only consistent pattern is for USD/JPY to rise. As for the rest of FX, their performance depends on the causes of the steepening.
Following the 2008 crisis, there were arguably five sustained periods of US 2s10s curve steepening of more than 50bps: late 2010; late 2012; early 2013; early 2015; late 2016 (Chart 1)…
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