How should I be positioned? with Richard Bernstein (RBA) and Jason Draho (UBS CIO)
At a Glance
As we look ahead to 2026, the desk notes Richard Bernstein's emphasis on the surprisingly robust U.S. GDP growth, which is tracking around 4%, significantly above expectations, suggesting an optimistic macro backdrop for risk assets going into the new year. Per the full note source, this supports a potential bullish positioning in the FX space, likely favoring currencies like the USD as the Fed's role remains pivotal. Consensus views align around a strong U.S. economic outlook, reflecting a potential shift in monetary policy trajectories that could influence currency valuations significantly.
Key Takeaways
- 01U.S. GDP growth is unexpectedly strong at around 4%, favoring a bullish USD outlook.
- 02Expectations of Fed policy adjustments could further bolster U.S. currency strength.
- 03Market sentiment is divided, with some firms projecting more conservative forecasts.
- 04No upcoming high-impact economic events could lead to immediate FX volatility.
Full Analysis
What the desk is arguing
The desk interprets current macroeconomic signals as favorable for a bullish stance on the USD, factoring in unexpected GDP strength as noted by Richard Bernstein. Stronger-than-anticipated GDP growth provides a solid foundation for risk assets, and any monetary policy shifts by the Fed could further bolster the USD.
With U.S. GDP reportedly tracking around 4% as we close out 2025, this data point underscores a more dynamic economic environment. Such growth trajectories could lead to adjustments in how traders position themselves against their respective currencies, particularly focusing on the USD's strength.
Where it sits in our coverage
Currently, our consensus target for USD is set at 1.075, reflecting a moderately optimistic outlook. Notable firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This perspective positions us comfortably at the higher end of the forecast spectrum, indicating our bullish stance aligns with broader market sentiment yet diverges within the context of specific forecasts, especially from bofa.
How other firms see it
Firms like jpmorgan are aligned with this bullish trend for the USD based on strong U.S. economic indicators, while bofa offers a more reserved stance, potentially reflecting a bearish outlook on U.S. growth sustainability. Currency pairs such as USD/EUR and USD/JPY are likely to be influenced heavily by U.S. data releases and Fed decisions.
What the calendar says
There are no high-impact events on the calendar in the next 30 days that could trigger volatility in the FX markets, suggesting a stable environment as traders digest past economic data and position heading into 2026.
Market Implications
Market participants should watch for any Fed commentary that could signal shifts in monetary policy, particularly as it pertains to the growing economic strength reflected in GDP data. A sustained USD rally could manifest if growth continues to outperform expectations.
From the original
As 2025 draws to a close, we cap off the year with Rich and Jason exchanging expectations for the market and macro environment in 2026 - including thoughts on the role of the Fed. Plus, a look at positioning preferences heading into the new year. Featured are Jason Draho, Head of
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