Global FX Trader: Divergence Dialed Up

The report highlights a 'Divergence Dialed Up' theme where the US Dollar benefits from AI-driven growth and energy self-sufficiency while Europe and Asia face headwinds. It provides updated FX forecasts for G10 and EM currencies amid ongoing geopolitical tensions in the Middle East.

Key Takeaways

• 1.The US Dollar is strengthening due to economic divergence driven by the AI boom and restricted global energy flows.
• 2.Sterling (GBP) faces downward pressure from political uncertainty, energy shocks, and structural overvaluation.
• 3.Asian central banks are shifting toward more hawkish stances to defend currencies against energy-driven inflation from the Iran conflict.

Table of Contents

• USD: On firmer footing
• GBP: Swings and bouts
• EM FX: Rate reality check
• NJA FX: Rate defense steps up
• AUD: Slower motion
• NOK: The oil proposition
• TRY: Growing macro and political risks
• Global FX Forecasts
• Return Forecasts & Valuations

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