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Macro & Markets G10 FX Outlook
- USD drop - Cyclical risks add to Trump-related risks for the US dollar
- EUR seasonal - Scope for EUR rebound into year-end
- Shutdown risks - US economy more vulnerable in this shutdown
- Labour data weak - Private sector jobs data indicates weakness
- Fed & economy - Fed to focus on labour market for now
- US economy & AI - Providing support for US economic activity
- Yields & inflation - Japan seen biggest inflation risk shift
- FX / Bonds - UK indicates strongest downside FX risk from higher yields
- Fed Independence - 4 candidates remain Hassett the biggest risk
- G10 monetary policies - BoE, Norges Bank most scope to ease
- USD FX - Steeper US yield curve seems likely with USD implications
- Japan fiscal outlook - France, Germany & Japan to have biggest deficits
- EUR - Lecornu offers hope after parliament speech & pension reform pause
- US tariff growth hit - EZ resilience in the face of geopolitics & tariffs
- ECB policy outlook - Downside inflation risks could see ECB cut rates
- ECB response - ECB rate stability – little need for further easing for now
- USD inflows - No selling of US assets but hedging could be significant
- Vol & Geopolitics - Markets remain complacent to geopolitical risks
- Geopolitics - Sharp spike in crude oil/nat gas would hit EUR
- Tariffs by Country - Europe can offset export hit via internal demand
- EUR flows - Foreign investors fill the gap left by the ECB
- FX Reserves - Scope for EUR FX reserve holdings to rise
- EUR long-term - Negative yields fuelled EUR under-valuation
- CHF strength - SNB falling behind the curve again
- CHF valuation - CHF REER level now above the 1std from 5yr average
- CHF & inflation - CHF seen as inflation hedge
- Forecast Table