💵 UBS predicts continued USD strength in foreign exchange environment
📊 Equities and risky assets performing well with low implied volatility
📉 Dollar appears to be undershooting front-end rates
🏦 Federal Reserve may not cut rates in September as expected by the market
💼 UBS recommends focusing on Swiss Franc crosses for carry trades
🇨🇭 Anticipates two more rate cuts by the Swiss National Bank in 2024
💴 UBS maintains target of USDJPY at 160.00 by year-end
🍁 Canadian April CPI report supports potential rate cut by the Bank of Canada
🔍 UBS suggests expressing dovish Canadian views in the FX market due to reduced short CAD positioning
💰 UBS recommends diversifying from USD exposure with carry trades, focusing on CHF crosses
🇯🇵 UBS remains skeptical of significant hawkish move from the Bank of Japan, targeting USDJPY at 160.00
Foreign Exchange Market Insights From UBS
Positive Outlook for USD Strength
💵 UBS predicts continued USD strength in the foreign exchange environment, despite reduced policy divergence in markets.
📊 Equities and risky assets are performing well with low implied volatility, supporting the dollar’s strength.
Market Expectations and Recommendations
📉 The dollar appears to be undershooting front-end rates and has not fully retraced recent sell-off according to UBS.
🏦 Federal Reserve speakers’ comments do not suggest a shift in policy based on April inflation print, possibly leading to no rate cut in September.
Currency-Specific Recommendations
💼 UBS recommends focusing on Swiss Franc crosses for carry trades and diversifying from USD exposure.
🇨🇭 The market may not have fully priced in two more rate cuts by the Swiss National Bank, leading UBS to anticipate them in the rest of 2024.
🇯🇵 UBS remains skeptical of a significant hawkish move from the Bank of Japan and maintains a target of USDJPY at 160.00 by year-end.
Canadian Dollar and Potential Rate Cuts
🍁 Canadian April CPI report supports a potential rate cut by the Bank of Canada in June. UBS suggests expressing dovish Canadian views in the FX market due to reduced short CAD positioning.