Macro Freestyle: Is the consensus wrong on US exceptionalism?
At a Glance
The desk posits that the prevailing narrative of US exceptionalism may be overstated, suggesting a shift in global sentiment that could impact the US dollar and emerging market currencies. Per the full note from Standard Chartered, this reassessment reflects broader changes in fiscal and monetary policy dynamics worldwide. As the market recalibrates its expectations, particularly in light of recent economic data, traders should remain vigilant about potential shifts in positioning. The consensus appears to be diverging, with some firms maintaining a more bullish outlook on the dollar while others are leaning towards a more balanced global perspective.
Full Analysis
What the desk is arguing
The desk argues that the consensus view on US exceptionalism is increasingly being challenged, indicating a potential shift in market dynamics. Per the full note from Standard Chartered, this change is driven by improving sentiment towards global markets, which could reshape expectations around tariffs, trade, and monetary policy.
Supporting this view, recent data suggests a growing divergence in economic performance between the US and other regions, with emerging markets showing signs of recovery. This could lead to a re-evaluation of the US dollar's strength, as traders adjust their positions in response to these evolving narratives.
Where it sits in our coverage
Our current consensus target for the USD/EUR pair is 1.075, with a range of 1.04 to 1.12. This aligns with jpmorgan, which has a target of 1.10 for March 2026, while bofa is more cautious, setting a target of 1.04 for the same period.
This perspective aligns with the broader market view, although it sits at the upper end of the range, suggesting that the desk's outlook is slightly more optimistic than some peers.
How other firms see it
Firms like jpmorgan and citi are aligned with the desk's view, suggesting a potential for the dollar to strengthen as global conditions improve. In contrast, bofa and goldman express skepticism, maintaining a more bearish outlook on the dollar's trajectory.
Watch the EUR/USD trajectory closely, as it may reflect the broader implications of monetary policy shifts from the ECB and the Fed. Additionally, the performance of emerging market currencies will be crucial in assessing the validity of the desk's thesis.
What the calendar says
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From the original
Standard Chartered’s Eric Robertsen, Global Head of Research and Chief Strategist and Madhur Jha, Head of Thematic Research, assess what is driving changing market perception on US exceptionalism. They also examine if it reflects improving sentiment towards the rest of the world,
Related speeches
4 itemsMacro Freestyle – The changing global outlook
The desk argues that the ongoing geopolitical tensions, particularly the Middle East conflict, are creating significant discrepancies between market expectations and macroeconomic realities, particularly regarding growth and inflation. Per the full note [source], Standard Chartered highlights that while markets are fixated on inflationary pressures, they are underestimating the potential for demand destruction across various economies. This misalignment could lead to a recalibration of central bank policies, particularly as inflation persists longer than anticipated, impacting discretionary spending and investment decisions.
Macro Freestyle: Trade wars, currencies and central banks
The desk believes that the US dollar will remain under pressure due to ongoing trade tensions and shifting central bank policies, as outlined in the recent commentary by Standard Chartered. Per the full note, the interplay between inflation dynamics and global trade flows is critical, particularly as emerging market (EM) central banks adjust their strategies in response to these pressures. The desk highlights that the dollar index may face challenges, especially if inflation data continues to surprise to the upside, which could lead to a more aggressive stance from the Federal Reserve. Current positioning suggests a cautious outlook for the dollar against major currencies, particularly in light of potential shifts in EM FX policies.
Macro Freestyle: Focusing on the fiscal
The desk posits that fiscal sustainability in the US and China will be pivotal in shaping financial markets through H2-2025, particularly impacting rates and FX dynamics. Per the full note from Standard Chartered, the discussion highlights that limited fiscal space in emerging markets (EM) could exacerbate growth challenges, suggesting a potential divergence in economic trajectories between developed markets (DM) and EM economies. Current fiscal pressures could lead to increased volatility in FX markets, especially as central banks navigate these challenges. The consensus view among firms suggests a cautious approach to positioning, with a focus on the implications of fiscal policy on currency valuations.
Macro Freestyle – Risks to market resilience
The desk highlights increasing risks to financial-market resilience, driven by geopolitical tensions and fiscal uncertainties, as articulated by Standard Chartered's recent commentary. Per the full note, the recent IEEPA tariff ruling could exacerbate market volatility, particularly in commodities and JGBs, while concerns about AI-driven market optimism may lead to a recalibration of investor sentiment. With a consensus target of 1.075 for USD/JPY, traders should remain vigilant as these factors unfold, especially with potential implications for central bank policies.
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