JPMorgan Econ FI-FX Mid-Year Outlook Presentation Ten questions (and answers)...-109013521

GlobalFXStrategyJuly3,2024FXMid-YearOutlookPresentationTenquestions(andanswers)oncurrenciesin2H24GlobalFXStrategyMeeraChandanAC(44-20)7134-2924meera.chandan@jpmorgan.comJ.P.MorganSecuritiesplcArindamSandilyaAC(65)6882-7759arindam.sandilya@jpmorgan.comJPMorganChaseBank,N.A.,SingaporeBranchSeetheendpagesofthispresentationforanalystcertificationandimportantdisclosures.AllchartsaresourcedfromJ.P.Morganunlessotherwisespecified.Tenquestions(andanswers)oncurrenciesin2H24DollartostayelevatedduetoUSD’simprovingyieldadvantageandlingeringexceptionalism.Tradingapproachremainstactical.ModestFedeasingisn’tsufficientforoutsizedUSDweakness;agrowthpickupex-USisrequiredaswell.StayvigilantforsuchoutcomesgivenrichUSDvaluations.ValleyofUSDsmileexistsbutwillbenarrow.USelectionsaddupsideriskstoUSDandarealreadyimpactingmarkets.TransmissiontoFXcouldbevia:tariffrisk(USDpositive),Russiapolicy(EUR-negative),fiscal(USDpositive),dollarpolicy(couldbelongertermUSD-bearish).Thefirsttwocouldbeimplementedinatimeliermanner.Electionopportunities:EventpricingistrackingpriorcycleswithUSDTWI,CNHvolsclosetopriorhighs,MXNmiddling,butEuropeanFXvisiblylagging.Medium-termUSD/CNHdigitalriskreversalsappearattractive.Rotationawayfromglobalcarryremainsakeythemebutwillbeaprocessandwillrequirestable/lowerUSyields.Somehigh-yielderscouldrecoverbutri...