Supply Shock Continues, FX Divergence Intensifies
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Supply Shock Continues, FX Divergence Intensifies
Goldman Sachs believes energy and supply-chain disruptions will affect macro data and FX pricing for a longer period, supporting a stronger dollar in the near term and creating greater divergence among currencies based on terms of trade, risk sensitivity, carry, and policy response.
- The report argues that supply disruptions are beginning to show up in macro data such as PMI input prices and supplier delivery times, driven by constrained energy flows, activity restrictions, and delayed recovery in some sectors.
- Goldman Sachs expects the USD to remain strong in the near term, especially versus some Asian currencies; however, tighter FX policy management could slow the transmission of dollar pressure.
- The key differences in EM FX performance come from terms-of-trade and risk-appetite sensitivity; THB, INR, and PHP are hit hard by worsening terms of trade, while PLN, CZK, HUF, KRW, and CLP come under pressure in an environment of rising oil prices and weaker risk appetite.
- The report is relatively constructive on some commodity-linked or event-driven trades: BRL, HUF, and ZAR can serve as risk-repair trades, CAD shows relative resilience during energy shocks, CHF may strengthen again in the medium term, and HUF has upside risk tied to the Hungarian election and EU funding scenarios.
Report interpretation
Overview
This report is a macro FX research note published by Goldman Sachs' global FX team on 2026-04-03, titled "Supply Pain Refrain." It discusses the performance logic of the dollar, emerging market currencies, NZD, CAD, CHF, and HUF under energy supply shocks and market risk volatility. The authors argue that while markets are highly focused on day-to-day news, the persistence of supply-chain and energy-flow constraints is having a more durable impact on economic conditions and FX markets; FX trading should shift from a single risk-sentiment lens to a more granular currency segmentation.
Core views
The report's core views are as follows: first, the dollar remains supported in the near term by supply shocks, stronger U.S. employment data, and global growth concerns, and Goldman Sachs' recent forecast revisions also point to a stronger dollar near term, especially versus Asian currencies. Second, EM FX performance will be determined by the combined effects of terms-of-trade shocks, risk beta, and carry; energy importers and cyclically sensitive currencies are more likely to come under pressure. Third, NZD lacks domestic policy support; the RBNZ tends to ignore the first-round impact of oil-price shocks, and New Zealand's weak labor market leaves NZD vulnerable to higher Treasury yields and downside growth risks. Fourth, CAD benefits from improved terms of trade as Canada is a major oil exporter, but if global growth concerns rise materially, it could still underperform safe-haven currencies. Fifth, CHF is likely to be restrained by SNB intervention bias in the short term, but as the energy shock lifts inflation risks, EUR/CHF is more likely to trend lower in the medium term. Sixth, HUF has asymmetric upside in a Hungarian election, a potential EU fund disbursement, and an external-balance-improvement scenario.
Analysis framework
The report combines macro event analysis, historical FX correlations, terms-of-trade changes, risk-sentiment beta, carry, central bank policy communication, and scenario analysis. For EM currencies, it compares changes in energy and metal terms of trade, historical beta versus the S&P, and FX carry; for CAD it uses the GSTOT framework to assess sensitivity to oil shocks; for CHF it combines Swiss inflation with the SNB's historical FX intervention behavior; and for HUF it uses a 2023 Polish-election analogy and the GSFEER model to assess the impact of EU funds on external balance and the fair value of the real effective exchange rate.
Methodology notes
Combine terms-of-trade changes driven by energy and metal prices with a currency's historical sensitivity to global risk sentiment to judge relative EM currency performance in an environment of rising oil prices and falling risk appetite.
The report notes that March FX performance was still mainly differentiated by terms of trade, but the importance of risk beta increased in day-to-day price action. Energy importers and currencies with low carry buffers and high risk beta are more likely to underperform.
Assess a currency's sensitivity to global supply and terms-of-trade shocks, especially to judge the relative performance of commodity currencies such as CAD under an oil-price shock.
The report says CAD is one of the currencies most sensitive to oil-price shocks within the GSTOT framework, and therefore has a relative performance advantage when energy shocks persist.
Map changes in the current account or external balance to fair value in real trade-weighted exchange rates, used to assess the medium-term fundamental support for HUF.
The report estimates that in a benign scenario with EU fund disbursement, RRF grants of about EUR 6.5 billion, or roughly 3% of 2025 GDP, could push HUF real trade-weighted fair value up by close to 4%.
Explain the SNB's historical intervention bias through Swiss inflation conditions rather than simply the EUR/CHF level.
The report argues that Switzerland's starting point of inflation close to 0% explains why the SNB is currently more willing to suppress CHF appreciation, but the inflation upside risk from the energy shock may gradually reduce the SNB's willingness to prevent CHF strength.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- USDNear-term strength
- Strengths
- Persistent supply shocks, solid U.S. employment data, global growth concerns, and demand for the dollar as a reserve and trade-settlement currency provide support.
- Weaknesses
- U.S. policy uncertainty remains a key factor behind dollar weakness over the past year, and the dollar's long-term role may continue to decline directionally.
- Comparison
- The report argues that traditional FX correlations have recently reasserted themselves, so large hedging-ratio adjustments based on long-term changes in the dollar's role should be delayed.
- Risks
- Tighter FX policy management could slow the transmission of dollar pressure; if risk sentiment continues to recover, some of the dollar's safe-haven support could fade.
- EM FXMarked divergence
- Strengths
- BRL and COP are supported by high carry and positive terms of trade, while MYR stands out relatively well on improving terms of trade and limited risk exposure.
- Weaknesses
- THB, INR, and PHP face clear deterioration in terms of trade; PLN, CZK, HUF, KRW, and CLP have low carry buffers and are sensitive to risk.
- Comparison
- Energy importers and cyclical currencies have broadly underperformed the dollar over the past month, with Asian energy importers especially lagging after volatility adjustment.
- Risks
- If markets begin to price in a more pronounced global growth shock, even commodity-linked or high-carry currencies such as BRL and COP could come under pressure.
- NZDWeak
- Strengths
- The source text does not identify a clear strength; it mainly emphasizes the lack of additional hawkish repricing catalysts.
- Weaknesses
- The RBNZ is dovish, New Zealand's labor market has softened the most among G10 countries, and NZD is sensitive to higher yields and downside growth risks.
- Comparison
- Against the backdrop of other G10 central banks responding more hawkishly to oil shocks, RBNZ communication is more dovish.
- Risks
- Persistent oil-price increases, higher U.S. Treasury yields, and global growth concerns could continue to weigh on NZD.
- CADRelatively resilient
- Strengths
- Canada is a major oil supplier to the U.S. and exports to China; higher oil prices improve terms of trade, and CAD's high correlation with the dollar helps it remain resilient in some risk-off environments.
- Weaknesses
- Recent Bank of Canada communication has been dovish, so policy divergence is unlikely to provide a tactical tailwind.
- Comparison
- Compared with other cyclical currencies, CAD is better supported in an energy shock; but versus safe-haven currencies, it could still underperform if global growth concerns intensify.
- Risks
- If risk sentiment continues to recover and commodity-market pressure eases, CAD could face downside risk because of its beta to the dollar.
- CHFMedium-term strength
- Strengths
- Inflationary risks from the energy shock may reduce the SNB's willingness to suppress CHF appreciation, supporting a lower EUR/CHF.
- Weaknesses
- The SNB's current intervention bias may still limit CHF's safe-haven performance in the short term.
- Comparison
- The report suggests this cycle may resemble the 2022 shock: an initial phase of CHF underperformance driven by the SNB, followed by a clearer EUR/CHF downtrend.
- Risks
- If Swiss inflation does not rise materially or the SNB continues to intervene aggressively, the timetable for CHF strength could be delayed.
- HUFScenario-driven upside
- Strengths
- An opposition victory or improved Hungary-EU relations could bring capital inflows; potential RRF grants could improve the external balance; and a stronger starting external balance plus higher real rates enhance resilience.
- Weaknesses
- High energy prices remain an obstacle to HUF appreciation.
- Comparison
- Using the 2023 Polish election as an analogy, the report sees about 5% downside in EUR/HUF over the next few months in a benign scenario.
- Risks
- If the election result preserves the status quo, the energy shock could remain the main driver of the forint; failure to disburse EU funds would weaken the fundamental-improvement case.
Key data
- Report date2026-04-03The cover shows Economics Research 3 April 2026 | 2:17PM BST.
- Key currency themesUSD, EM FX, NZD, CAD, CHF, HUFThe cover subtitle explicitly lists these currencies and currency groups.
- New Zealand inflationClose to 3%The report says overall New Zealand inflation is close to the upper end of the RBNZ target range.
- HUF scenario: potential EUR/HUF downsideabout 5%Using the 2023 Polish election as a reference, a benign Hungary-EU relationship scenario could see EUR/HUF fall by about 5% over the coming months.
- HUF scenario: energy-balance shockabout -1.6 percentage pointsCurrent oil and gas price levels point to a decline in the net energy balance of about 1.6 percentage points versus 2025.
- HUF scenario: potential EU fundsEUR 6.5 billion, about 3% of 2025 GDPIn a benign EU funding scenario, RRF grants could transfer EUR 6.5 billion before end-2026.
- HUF fair value impactroughly 4% upside in real trade-weighted fair valueThe GSFEER model shows that a 3% current-account improvement could translate into roughly 4% fair-value upside for HUF, all else equal.
Impact & implications
The investment implication is that supply and energy shocks should not be viewed only as short-term news trades; they should be incorporated into medium- and short-term FX forecasts and portfolio risk management. The dollar still has near-term support, but it is not yet appropriate to trade directly on the long-term decline in the dollar's role. EM currencies need to be distinguished by energy-import pressure, risk beta, and carry buffers; within G10, NZD is vulnerable, CAD is relatively resilient, CHF has room to strengthen again in the medium term, and HUF is driven by election and EU-funding scenarios. At the portfolio level, investors could consider long USD/SEK as a risk-off hedge, short EUR/JPY to express growth concerns, and long BRL/HUF/ZAR to express a risk-repair trade, while monitoring oil prices, global growth expectations, and changes in central bank responses.
Risks
- The duration of restricted energy flows is longer than expected, further raising input costs and weighing on growth.
- Deepening global growth concerns cause commodity exporters and high-carry currencies to come under pressure as well.
- Tighter FX policy management slows or distorts the transmission of dollar pressure into local currencies.
- Changes in central-bank reaction functions, for example if RBNZ, BoC, or SNB communication diverges from the report's assumptions.
- Hungary election results, EU fund disbursement, and improvement in Hungary-EU relations fall short of expectations.
- The long-term change in the dollar's role is directionally important, but the report believes it is still too early to trade it; if the market reprices ahead of time, volatility could rise.
What to watch
- The timetable for recovery in energy-flow restrictions, movement bans and other activity limits, and highly exposed industries such as chemicals.
- PMI input prices, supplier delivery times, and other macro data reflecting the transmission of supply shocks.
- Asian energy-importing currencies, especially the terms-of-trade pressure on INR, PHP, and THB.
- Whether rising oil prices and weakening risk appetite occur simultaneously, and their impact on PLN, CZK, HUF, KRW, and CLP.
- How RBNZ meetings frame oil shocks, inflation expectations, and labor-market weakness.
- Whether the Bank of Canada continues to ignore the near-term inflation upswing, and how CAD's correlation with oil and the dollar changes.
- Swiss inflation, the manufacturing PMI price subcomponent, and SNB foreign-exchange intervention signals.
- Hungary's April 12 parliamentary election, EU fund disbursement progress, and EUR/HUF movement.