Global FX and Commodities: The bullish case for gold, the bearish case for USD ex-yen and the shutdown showdown
At a Glance
The desk posits a bullish outlook for gold while adopting a bearish stance on the USD, excluding the yen, amid ongoing political uncertainties in the U.S. and Japan. Per the full note source, the commentary highlights the cyclical nature of FX markets and the implications of potential government shutdowns on currency valuations. With gold's appeal likely to strengthen as a safe haven, the desk anticipates a shift in positioning that could favor non-USD currencies. The commentary also revisits the yen's prospects in light of recent political developments, suggesting a nuanced approach to Japanese monetary policy.
Key Takeaways
- 01J.P. Morgan is bullish on gold and bearish on the USD ex-yen.
- 02Cyclical FX is favored as global growth dynamics improve.
- 03Yen outlook is being reassessed after Japan's political developments; US government shutdown is a key risk.
Full Analysis
What the desk is arguing
J.P. Morgan analysts argue that gold is well-supported amid ongoing geopolitical and fiscal uncertainties, while the US dollar is expected to weaken against most currencies except the yen. They advocate for cyclical FX exposure, favoring currencies tied to global growth, and reassess the yen's outlook following recent political changes in Japan. The US government shutdown is noted as a key near-term risk.
Where it sits in our coverage
We do not have internal coverage data on the relevant currencies/gold, so we cannot cite firm consensus or spread. The desk's views align with a broader market tilt toward bearish USD and bullish gold, but no specific targets are provided.
How other firms see it
No other firms are cited in the source commentary. The analysis is entirely J.P. Morgan's own, with no cross-references to competing views.
Market Implications
If J.P. Morgan's view materializes, gold prices could rise further, while the USD may weaken broadly. Cyclical currencies such as AUD, NZD, and CAD could outperform. The yen's trajectory will depend on the outcome of Japan's political situation and global risk appetite. The US shutdown risk adds near-term uncertainty, potentially boosting safe-haven assets like gold and the yen.
From the original
Meera Chandan, Natasha Kaneva, Anezka Christovova, Junya Tanase and Patrick Locke discuss the outlook for gold/ the dollar, emphasize the case for cyclical FX, re-examine the prospects for yen following political developments in Japan and look ahead to next steps in the US govern
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