UBS ON AIR
Loading…
FX BANK FORECAST · COVERAGE
Institutional FX coverage in your inbox
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 36 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 36 institutional desks. No promotion.
At a Glance
The desk believes that the recent tariff announcement will continue to drive market volatility and heighten risk aversion among investors. Per the full note source, Jason Draho of UBS highlights a sell-off across global equity markets, with the magnitude of the tariffs exceeding expectations and various sectors, particularly semiconductors and pharmaceuticals, potentially facing further sanctions. This uncertainty can lead traders to seek safer assets, influencing currency movements, especially in pairs linked to commodities and risk sentiment.
Key Takeaways
Full Analysis
The desk identifies the recent increase in tariffs as a significant trigger for volatility in the FX markets, likely leading to preferences for safe-haven currencies. According to Jason Draho from UBS, the unexpected depth of tariff rates announced sent shockwaves through global equity markets, marking a phase of heightened investor caution.
The announcement detailed a near-instant implementation of a 10% tariff across a wide range of goods, impeding the previously stabilized market sentiment. The implications for sectors like semiconductors may drive further tariffs, intensifying investor concerns and, consequently, market fluctuations.
Our current consensus target sits at 1.075 within a range of 1.04 to 1.12. Key firms positioned around this target include: - JPMorgan targets 1.10 for Mar26. - BofA sets a lower target of 1.04 for the same tenor.
The desk's view aligns closely with the upper bound of the consensus range, indicating a cautious perspective on current market dynamics influenced by the rising tariff concerns.
Most aligned firms, including JPMorgan, are echoing concerns over increased market volatility leading to risk aversion, while BofA offers a more pessimistic outlook. This division in sentiment highlights differing strategies in navigating potential currency fluctuations under market stress.
In addition, the relationship between tariffs and the EUR/USD remains crucial as traders reassess positions based on global risk sentiment driven by geopolitical tensions and trade relations. It's essential to monitor how these dynamics unfold in the context of the upcoming fiscal quarters.
Market Implications
Traders should watch for volatility around the 1.075 level as further developments on tariffs unfold. The market's reaction to safe-haven flows, especially involving USD and JPY, will be crucial in the coming sessions.
From the original
As market volatility persists following a historical week for the global economy and financial markets, Jason shares his thoughts on last week’s tariff announcement, the potential paths forward, and how to navigate your portfolio through the uncertainty. Featured is Jason Draho,
The FX desk anticipates a volatile market environment as uncertainty lingers over impending tariff announcements from the Trump administration, coupled with critical economic indicators such as the March employment report. Per the full note from UBS, these developments could amplify existing investor anxiety regarding slowing growth and potential recession risks. While the exact impacts on currency pairs are yet to unfold, positioning recommendations from UBS's April House View suggest strategic adjustments may be necessary as traders navigate this heightened uncertainty. Historically, tariff announcements have led to significant market reactions, underscoring the importance of watching these developments closely.
The desk believes that recent tariff announcements by the Trump administration will significantly impact market volatility and economic growth projections. As per the full note [source], the administration's aggressive tariff approach aims to alter trading dynamics, following a historical low effective tariff rate of 1.5% when Trump took office in 2016. With prevailing volatility in financial markets, the focus shifts to how these tariffs will reshape both investor sentiment and portfolio management strategies moving forward.
The desk anticipates ongoing uncertainty in the U.S. trade policy landscape will continue to weigh on economic sentiment and the dollar. Per the full note [source], Jonathan Pingle from UBS highlights that recent tariff announcements exceeded market expectations, suggesting significant volatility ahead. This thought aligns with potential shifts in monetary policy direction as the Fed navigates these headwinds. Commentary on the evolving trade environment underscores the impact of tariffs on the economic outlook, especially as companies aim to adjust to the shifting landscape.
The desk argues that the recent selloff in US equities, particularly the S&P 500 entering correction territory with a decline of over 10%, reflects escalating policy uncertainty that has rattled investor confidence. Per the full note from UBS, this spike in uncertainty is linked to significant tariff discussions and higher inflation metrics which have spurred corrective behavior across asset classes. Given that positioning was previously elevated, the market's adjustment was somewhat expected, and upcoming inflation data will be pivotal for direction. Notably, the latest CPI data is expected to influence investor sentiment profoundly and could signal further volatility ahead.
Live cross-firm bank consensus across 36 desks — FX, oil & gold
View bank forecasts