Wall Street's Trading Desks Come Down From a Record High
Wall Street's trading desks are reporting a normalization in revenue expectations after earlier record highs. While optimism remains regarding third-quarter performance, it is not expected to replicate the substantial gains witnessed earlier in the year. This adjustment highlights a potential shift in market dynamics and may affect trading strategies going forward, particularly as traders recalibrate against previous high-water marks.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). The current sentiment reflects a cautious yet hopeful outlook, mirroring Wall Street's tempered expectations following a record-setting performance earlier this year.
How firms align
Goldman stands aligned with a bullish target of 1.12, suggesting confidence in a recovery through early next year. Meanwhile, BofA provides a contrary view with a more conservative stance at 1.04, indicating doubts about sustained earnings growth. This divergence underscores differing views on market conditions ahead.
What the data shows
The trading desks are indicating a more balanced approach, with recent forecasts adjusting revenue expectations without severe downturns. Insights from our latest research suggest that even with a slowdown, the market may stabilize around current levels, as detailed in /research/market-outlook.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Wall Street sees a correction from early 2023 highs in trading revenue.
- 02FX traders should prepare for recalibrations in their strategies.
- 03Market dynamics shifting, watch for EUR/USD around 1.075 in coming weeks.
Market implications
Next month, market participants should keep an eye on the EUR/USD level around 1.075, particularly with any upcoming economic releases that could influence sentiment. Our consensus points to potential fluctuations that may arise in response to these developments.
Risks to this view
Key risks include a harsher than expected economic slowdown or worsening geopolitical tensions, which could force a reevaluation of forecasts and trading positions. A surprising data release negatively impacting the USD could lead to a significant shift in market perception.
Sentiment by currency
USD~EUR~JPY~GBP~Composite USD score: +0.00
Sources & References
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