JPMorgan Chase & Co. (JPM) has published its forecast for the US dollar for the second half of this year. The institution factored in the global economic climate and geopolitical influences in its projections.
JPMorgan Predicts Greenback Outlook For Rest Of The Year
The bank predicts a bullish medium-term greenback performance in tandem with high yields, a significant growth barrier and other relevant aspects. Investing.com indicated that this firm did, however, mention that “tactical concerns stem from nascent signs of fading US growth exceptionalism and saturated investor longs”. JPMorgan also stated:
Inflation divergences will be key as central banks are inflation- rather than growth-focused.
JPM analysts said that despite the currency’s defensive position, its US exceptionalism (which seems to be diminishing) and carry advantage are driving its bullish momentum. According to Investing.com, the ING Group NV (ING) global head of markets and regional head of research for UK & CEE, Chris Turner, said that the “dollar share in FX reserves” declined over the past two decades but recently regained some stability. Turner further commented:
… the dollar’s share in global deposits and in global liabilities has been remarkably stable in the 60-70% area over recent decades.
According to JPMorgan, the US Federal Reserve’s rate stance anchors the greenback’s performance against the Japanese yen. The bank said that should the US economy stay gritty, it is possible that USD/JPY can settle at 160.
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The bank’s economists believe that although the UK economy is growing, the GBP’s “seasonality, valuations and positioning prompt tactical shorts”. Based on this analysis, JPMorgan’s macro portfolio recommendation is to sell the GBP against the USD.
