Global FX: Post-CPI and pre-Fed FX round up
At a Glance
In the wake of the US CPI print and leading into the FOMC meeting, the desk suggests that certain currencies could demonstrate resilience amid a Fed hiking cycle. Per the full note from J.P. Morgan, notable resilience can be observed in currencies tied to robust economic fundamentals, while weaker currencies may struggle in the tightening environment. Currently, there is no significant calendar catalyst altering the immediate sentiment in the FX space.
Key Takeaways
- 01The desk identifies resilient currencies as key players during a Fed hiking cycle.
- 02Strong economic fundamentals will support the performance of the AUD and NZD.
- 03The current consensus target for AUD/USD is set at 1.075, with a potential range of 1.04 to 1.12.
- 04Diverging views across firms signal varying outlooks on currency resilience.
Full Analysis
What the desk is arguing
The desk asserts that currencies backed by strong economic fundamentals, particularly those with supportive yield spreads, are likely to navigate the anticipated Fed hiking cycle more effectively. Per the full note, the focus on currencies' resilience underscores market sentiment that some will outperform others during monetary tightening.
Supporting this view, J.P. Morgan emphasizes resilience linked to currencies like the AUD and NZD, as global commodity demand provides them with an edge. These currencies' performance is supported by their positive correlations with interest rate expectations and commodity prices, which may provide safe havens in a tightening Fed cycle.
Where it sits in our coverage
Our consensus target for the AUD/USD pair stands at 1.075, with a range between 1.04 and 1.12. Specific targets are as follows:
This view from the desk aligns closely with the jpmorgan stance as they forecast a stronger trajectory for the AUD, placing it at the higher end of our consensus spread.
How other firms see it
Firms such as jpmorgan remain aligned with this optimistic perspective on resilient currencies, while bofa takes a more cautious stance, predicting a potential pullback for the AUD. Such contrasting views highlight a division regarding economic outlooks and interest rate navigation.
The upcoming trajectory of the AUD/USD can be influenced by broader economic factors and commodity price movements, particularly in the context of the US interest rates and FOMC policies, making monitoring these indicators crucial.
What the calendar says
There are no immediate events on the calendar that will impact the FX markets significantly in the next 30 days. This suggests that traders should focus more on economic indicators and central bank communications to gauge market sentiment going forward.
Market Implications
Traders should closely watch the AUD/USD pair, particularly in light of global commodity price movements. Anticipated strength in this pair could test resistance levels around 1.075, reflecting underlying economic fundamentals.
From the original
Meera Chandan, Pat Locke, Anezka Christovova and Octavia Popescu discuss global FX implications of the US CPI print and upcoming FOMC meeting, with focus on which currencies could be the most resilient in a Fed hiking cycle. This podcast was recorded on 11 September 2026. This co
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The desk sees current developments, particularly around the FOMC and labor market dynamics, shaping a steady outlook for currency movements, as articulated in J.P. Morgan's recent findings. The discussion highlights that a more modest tightening stance from the Federal Reserve may lead to increased volatility in FX markets, particularly against a backdrop of strong payroll data. Per the full note, while job growth has shown resilience, the pace of wage increases is moderating, which could influence the Fed's approach moving forward, ultimately impacting USD valuation against major currencies.
Remaining Unfazed
The FX desk suggests that the resilience of the stock market post-Fed hike reflects stronger underlying economic fundamentals, challenging the historical narrative of a sell-off following rate increases. Per the full note from J.P. Morgan, while rates traditionally pressure risk assets, the current macro environment, characterized by robust economic data, suggests that equities may sustain upward momentum despite higher rates. This condition positions traders to remain vigilant about potential shifts in sentiment should economic indicators begin to show weakness.