Top of the Morning: CEO Macro Briefing Book - Insights for Dealmakers

What the desk is arguing

The desk posits that the current momentum in deal-making could act as a catalyst for appreciation in selected currencies, reflecting broader economic recovery. Per the full note source, the resurgence of M&A activity, especially post-pandemic and against a backdrop of lowered interest rates, underscores a potentially fertile ground for exciting currency movements.

Recent trends show that M&A activity is rebounding, as it approached nearly $3 trillion globally in 2021 before declining following the rate hikes in 2022. Now, momentum in this area appears to be picking up again, potentially influencing related currencies positively.

Where it sits in our coverage

Our consensus target for USD/EUR remains at 1.075, with a range set between 1.04 and 1.12. Key firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)

The desk's call for continued positive momentum aligns with jpmorgan, which forecasts a stronger dollar throughout its anticipated timeframe. However, this position sits on the upper end of the current spread, indicating varying convictions amongst firms on future pricing.

How other firms see it

Generally, firms like jpmorgan are aligned with this optimistic outlook regarding a rebound in M&A activity, which could spur currency movements. Conversely, firms like bofa maintain a more cautious stance, reflecting skepticism about sustained currency valuations amidst broader economic uncertainties.

This discussion intersects notably with the EUR/USD trajectory and ongoing monetary policy considerations from central banks, illuminating the delicate balance of risk and opportunity in current forex landscapes.