Report published September 25, 2026
Dollar on Diesel: Cheap and Still Running – J.P. Morgan FX Markets Weekly
J.P. Morgan · September 25, 2026
J.P. Morgan maintains a bullish outlook on the US dollar, noting valuations remain cheap relative to widened US rate differentials and growth momentum. Macro strategies favor holding long USD vs CAD and SEK, expanding DM carry via long NOK/SEK, and staying selective in EM FX carries like MXN, COP, and HUF while hedging risks.
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Finvaulta summarizes J.P. Morgan's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
Key Takeaways
- 1.Remain bullish on the US dollar as valuations are cheap relative to rate spreads and US economic momentum outpaces peers.
- 2.Potential US diesel export ban risks are most acute for direct importers in Latin America and DM Europe, but European stockpiles and domestic refining mitigate severe disruptions.
- 3.Maintain high-carry exposure in DM via long NOK/SEK, while funding carry out of low-yielding CHF and SEK, and keeping long USD baskets vs CAD and SEK.
Table of Contents
- FX Outlook
- Dollar on Diesel: cheap and still running
- The dollar still looks too weak
- US exceptionalism: Macro's Schrödinger's cat
- Potential US diesel export ban: FX take-aways
- DM vulnerability contained relative to LATAM EM but outlook unchanged on mitigating factors
- Next week: US payrolls, PCE, RBA, UK Labour Party Conference
- Main trade recommendations
- FX Models
- G10 FX short-term fair value
- Cross-sectional overview
- Chart of the week
- Macro Trade Recommendations
- Trades
- Emerging Markets FX
- EM FX - Under pressure
- EMEA EM FX: Hold the handrail, stand to the right
- LatAm FX: Remaining OW through the volatility
- A word on diesel imports in the region
- Asia FX: Keeping a bullish lean on CNY FX
- FX Derivatives
- Nobody Puts EUR In The Corner
- Vols remain low, but are no longer cheap
- Pressure From Political Fragmentation Adding to Downside EUR Sentiment
- Lever up EUR Downside via USD and GBP Correlations
- Buying Weak EUR Correlations
- Hybrids for a Busy Calendar Ahead
- JPY conditionals and x-skew
- USD/JPY topside conditionals
- JPY skew vs x-skew
- Collecting Carry in Vol Curves
- Model Portfolio Update
- Market movers
- Event Risk Calendar
- Central bank announcement dates in 2026
- J.P. Morgan FX forecasts vs. forwards & consensus
- J.P. Morgan Global FX Strategy
Report data
US diesel vulnerability informed FX price action on export ban news... DM is more insulated than EM; GBP worst-ranked in DM, LATAM in EM — as of September 25, 2026.
| Metric | Estimate | Context |
|---|---|---|
| Broad Dollar Index 1-week move | 1.5 sigma | Dollar appreciation lagged the two-sigma move in interest rates. |
| Broad dollar discount vs rate spreads | 2% | Undershoot of USD relative to widening US-RoW yield differentials. |
| US Flash Composite PMI | 58.4 index points | Rose to a five-year high, prompting yields to surge 10-15 bps. |
| Fed rate hike priced for October FOMC | ~17 bps | October meeting is underpriced relative to potential cyclical momentum. |
| S&P 500 year-end target | 8,000 index points | J.P. Morgan equity strategists raised target on supportive earnings and positioning. |
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