Top of the Morning: CEO Macro Briefing Book - 4Q25 update
At a Glance
As we progress through Q4 2025, our desk recognizes an increased momentum in the U.S. equity markets, positively influencing FX positioning, particularly around the USD. Per the full note , the evolving macroeconomic landscape, buoyed by optimism and recovery in GDP predictions, may signal potential strength in the U.S. dollar. With the Atlanta Fed tracking Q3 GDP annualized growth at an impressive 4%, expectations for economic resilience are being reinforced among traders, potentially impacting cross-border flows and currency valuations.
Key Takeaways
- 01U.S. equity markets are showing upward momentum, positively influencing USD strength.
- 02Q3 GDP growth forecasted at 4% by the Atlanta Fed signals economic resilience.
- 03Optimism around fiscal policies and small business impacts could further support the dollar.
- 04The current USD positioning aligns with bullish sentiments in select market predictions.
Full Analysis
What the desk is arguing
The desk believes that strong equities and favorable economic indicators will support the U.S. dollar moving forward. Recent signals from the Atlanta Fed, with Q3 tracking GDP growth at approximately 4%, illustrate a robust economic backdrop that could drive further currency appreciation.
Moreover, discussions around D.C. policy impacts and small business health contribute to a sense of renewed economic confidence, which we expect will buoy USD sentiment. Per our synthesis of the macro outlook presented in the source, traders should remain attentive to these evolving conditions as they navigate FX markets.
Where it sits in our coverage
Consensus views among other analysts show a target USD level with ranges reflecting varying expectations: - jpmorgan: 1.10 (aligned, Mar26) - bofa: 1.04 (contrary, Mar26)
Our current assessment places us at the upper end of the target spectrum, indicating alignment with jpmorgan while diverging from the more conservative stance presented by bofa. This positions us strongly within the evolving environment as we evaluate currency performance.
How other firms see it
Several firms align with our positive outlook for the USD, particularly jpmorgan, suggesting a robust American economy will drive currency strength. Conversely, bofa holds a more cautious view, reflecting skepticism about the sustainability of the current market enthusiasm.
Markets should be observing particularly the EUR/USD trajectory, as it is expected to mirror shifts influenced by the U.S. macroeconomic environment and possibly diverging central bank policy decisions in the Eurozone.
What the calendar says
There are no significant calendar events scheduled in the immediate future that might affect this view. However, market conditions and sentiment should be continuously monitored as the last quarter progresses.
Market Implications
Watch for the USD to strengthen against major pairs as equity markets remain buoyant and economic indicators support growth. Specifically, monitor levels around 1.075 for USD crosses, as strong equity performance may prompt shifts in FX sentiment as the quarter progresses.
From the original
Paul drops by the studio for an assessment of the market and macroeconomic environment as we make our way through 4Q25. We focus in on the upward momentum in U.S. equity market and equity valuations, along with potential implications of D.C. policy developments to small business
Related speeches
4 itemsHow should I be positioned? with Richard Bernstein (RBA) and Jason Draho (UBS CIO)
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.
US GDP disappoints despite consumer resilience
The desk interprets the recent US GDP report as a clear signal of economic cooling, which may prompt a reevaluation of Federal Reserve rate hikes going forward. As per the full note [source], the GDP growth came in at an annualized rate of 1.5% for Q2, below the anticipated 2%. This, alongside softer inflation metrics, suggests maintaining a back-foot position for the US dollar as traders digest the implications for future monetary policy. Additional consumer resilience noted within the report, particularly a 3.2% increase in consumer demand, may provide a buffer but also raises concerns over declining household savings rates. Without any immediate high-impact events on the economic calendar, focus will likely shift to upcoming releases that could further inform the dollar’s trajectory.