Key Currency Views

J.P. Morgan maintains a 'Bullish beta, bullish dollar' outlook, favoring high-yield EM energy importers and carry strategies. While the USD faces consolidation pressure, the firm remains strategically constructive on the currency pending further economic data.

Key Takeaways

• 1.Maintain bullish dollar and carry trade views; models indicate USD consolidation despite firm US data.
• 2.High-yielding energy importers (INR, HUF, TWD, ZAR) are advantaged, while CAD is the preferred carry-efficient exporter short.
• 3.JPY remains weak; authorities appear cautious regarding further FX intervention, likely capping it to moderate scales.

Table of Contents

• Key Currency Drivers
• What has changed since we published the mid-year outlook?
• USD: Payrolls wasn't a catalyst for more strength, but not enough for substantive weakness either...
• Energy importers looking more attractive...
• Pro-cyclical Party
• JPY: MOF struggles to stop JPY weakness – is GPIF next?
• Changes to trade recommendations
• The forecast bottom line: GBP, COP, PEN higher, Antipodeans slightly lower this week
• FX Models
• G10 FX short-term fair value

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