FX Daily: Tech collapses, FX shrugs
Per the full note from ING, the desk is arguing that the violent sell-off in US tech stocks is being treated by FX as an idiosyncratic sectoral repricing rather than a macro risk-off event, and that participants should therefore expect defensive currencies — notably the Japanese yen and Swiss franc — to outperform rather than the dollar to decline broadly. The evidence the desk leans on is the striking divergence in volatility: the Philadelphia semiconductor index is trading at 61% one-month implied vol against just 7% for USD/JPY, a gap that tells traders the equity move is not transmitting into G10 FX. That interpretation is reinforced by the muted, textbook defensive reaction — AUD and NZD underperforming, JPY and CHF bid — with moves small enough to suggest FX is not yet pricing a recession. Against our internal coverage, EUR/USD consensus sits at 1.1500 for Dec-26 with a 1.1000–1.2200 spread and spot at 1.1253, so the market is already leaning toward a stronger euro; GBP/USD consensus is 1.3500 with spot at 1.3464; and USD/JPY consensus is 156.00 with spot at 155.82. There are no high-impact calendar events in the next 30 days, so the next catalyst is positioning and year-end book-tidying rather than a scheduled print.
What the desk is arguing
The desk frames the current dynamic as a tech-sector-specific shock, not a macro regime change, and concludes that FX participants should position for defensive currency outperformance rather than a broad dollar decline. Per the full note from ING, the delayed reaction to the Democrat blue wave has hit tech hard, but the FX response has been "typically defensive, but muted" — a deliberate read rather than an oversight.
The supporting evidence is the volatility arithmetic: the Philadelphia semiconductor index trades on 61% one-month implied volatility against just 7% for USD/JPY. That 54-point gap is the desk's proof that FX is behaving as a less-correlated asset class and that the equity sell-off is being treated as idiosyncratic. The note also flags the spread of selling into consumer staples, utilities and healthcare as a warning that an asset-management industry underweight cash may be tidying up into year-end, but stops short of calling it a macro signal.
The alternative read — that this is the early tremor of a broader risk-off deleveraging that will eventually drag the dollar lower via Fed easing expectations — is implicitly rejected. Instead, ING expects the yen and Swiss franc to carry the defensive bid while the high-beta Antipodeans absorb the selling, with the dollar index supported by payrolls.
Where it sits in our coverage
EUR/USD consensus for Dec-26 sits at 1.1500 with a range of 1.1000–1.2200, and spot at 1.1253 leaves the market already priced for a stronger euro. GBP/USD consensus for Dec-26 is 1.3500 with a range of 1.2400–1.3800 and spot at 1.3464, essentially at consensus. USD/JPY consensus for Dec-26 is 156.00 with a wide 140.00–163.00 range and spot at 155.82.
On the EUR side, ubs targets 1.1600 for Dec-26 while cibc and commerzbank sit at the top of the range at 1.2200, and hsbc anchors the low end at 1.1000. On GBP, deutschebank targets 1.4200 for Dec-26 against nomura at 1.2900 and creditagricole at 1.3000. On JPY, scotiabank targets 140.00 for Dec-26 and hsbc 145.00, while nomura at 165.50 and mizuho at 163.00 sit at the weak-yen extreme. ING's defensive-FX call sits closer to the strong-yen camp in spirit but does not commit to a USD/JPY level.
How other firms see it
On the dollar-bearish side of the EUR/USD trade, rabobank at 1.1800, nomura at 1.1800 (Dec-26 1.2000), and rbc at 1.2000 are aligned with the consensus drift higher, while lloyds at 1.1200 and hsbc at 1.1000 are the notable contrarians expecting euro weakness. On USD/JPY, scotiabank (140.00), hsbc (145.00), rbc (147.00), bnpparibas (148.00), and bofa (149.00) line up with the defensive-yen view that ING's thesis implies, whereas nomura (165.50), mizuho (163.00), and commerzbank (160.00) see the yen weakening further.
The EUR/USD trajectory and the USD/JPY debate are the two clearest read-throughs for ING's defensive-FX call, with the BoE rate path also relevant via GBP/USD given the recent hike to 4.00%. Watch the yen crosses — AUD/JPY in particular — as the cleanest expression of the high-beta-versus-defensive split the desk describes.
What the calendar says
There are no high-impact events on the calendar in the next 30 days for these jurisdictions, so the near-term driver is positioning and year-end book-tidying rather than a scheduled print. That absence of catalysts raises the bar for a genuine FX breakout and supports ING's view that the tech sell-off will remain an equity story rather than a macro one until a data surprise forces the issue.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01ING reads the tech sell-off as idiosyncratic and expects defensive FX (JPY, CHF) to outperform rather than a broad dollar decline.
- 02The Philadelphia semiconductor index trades at 61% one-month implied vol versus 7% for USD/JPY — a 54-point gap the desk uses to argue FX is uncorrelated.
- 03EUR/USD consensus for Dec-26 is 1.1500 with spot at 1.1253; GBP/USD consensus 1.3500 with spot at 1.3464; USD/JPY consensus 156.00 with spot at 155.82.
- 04No high-impact calendar events in the next 30 days — positioning and year-end tidying are the near-term drivers.
- 05Contrarian views on USD/JPY (nomura 165.50, mizuho 163.00) and EUR/USD (hsbc 1.1000, lloyds 1.1200) mark the boundaries of the debate.
Market implications
Watch AUD/JPY as the cleanest expression of the high-beta-versus-defensive split ING describes — a break below recent lows would confirm the defensive bid is broadening. EUR/USD at 1.1253 is already 2.2% below the Dec-26 consensus of 1.1500, so any further risk-off that does hit FX would likely show up first in EUR/JPY and GBP/JPY. With no calendar events for 30 days, the next signal is year-end rebalancing flow and any follow-through in the semiconductor index.
Risks to this view
The call is invalidated if the tech sell-off spreads into credit or into a genuine macro risk-off event that forces the Fed to price cuts, which would drag the dollar lower broadly rather than defensively. A surprise rebound in the Philadelphia semiconductor index would remove the desk's core evidence and could see the defensive JPY and CHF bid unwind quickly. Year-end liquidity thinness could also amplify moves in either direction, making the 'muted' reaction less reliable than the desk assumes.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Rabobank | Bearish | 1.1000 |
ING | Bullish | 1.1300 |
MUFG | Neutral | 1.1200 |
Articles FX Daily: Tech collapses, FX shrugs Published 08:00 FX Translate Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download A delayed reaction to the Democrat blue wave has seen some powerful selling of tech stocks. A little surprisingly, the reaction in FX markets has remained very muted. FX participants so far see this as an idiosyncratic re-pricing of the tech sector, rather than a harbinger of recession.
Expect defensive FX to outperform, rather than a broad dollar decline Chris Turner , Frantisek Taborsky and Francesco Pesole The Israeli shekel is particularly sensitive to swings in US tech stocks USD: Payrolls can provide the dollar some support We have all seen big falls in tech stocks on the back of the threat to data centres . The fact that the equity sell-off spread to the defensive sectors of consumer staples, utilities and healthcare serves as a warning that an asset management industry underweight in cash may be tidying up positions into year-end. After all, most global benchmark equity indices, apart from China, are still in the green on a year-to-date basis.
FX markets have reacted to the equity sell-off in a typically defensive, but muted way. In the G10 space, the high beta Australian and New Zealand dollars are underperforming, while the defensive Japanese yen and Swiss franc are in demand. However, the moves have been small.
So far, it seems FX participants are prepared to see the tech sell-off as an idiosyncratic story on the back of the Democrat blue wave, rather than a major macro setback. Notably, the Philadelphia semiconductor index trades on a 61% one-month implied volatility compared to just 7% for USD/JPY. This may help investors to see FX markets as a less correlated asset class compared to the wild swings in tech.
Where we have seen the highest correlations in FX are places like the Israeli shekel. Local investors run high FX hedge ratios on their US investments and will now be in the process of buying back dollar hedges on their shrinking US tech portfolios. The big question for the dollar is whether this tech sell-off leads to a broader re-assessment of the US growth and inflation trajectory.
US short-dated rates have fallen close to 50bp since late September and the dollar's yield advantage over other major pairs has softened a little. Feeding into that story today will be the October US jobs report. Second-tier US job indices this week have all come in on the strong side and there seems to be no reason to expect a soft jobs figure today.
The whisper number currently stands at +82k versus last month's soft reading of +29k. A decent jobs number today will confirm the Fed's understanding that the US jobs market is 'solid' and could provide some support to short-dated rates and the dollar. We still think it is too soon to call a broad-based dollar decline and that defensive positions in FX markets will be expressed through cross rates like a lower AUD/JPY or in the emerging world with a weaker South African rand or Mexican peso (see below).
Sources & References
How we cover this story
Related news on this pair
EUR/USD Weekly Forecast: Greenback holds firm despite looming US political stalemate
USD resilience despite US political uncertainty suggests safe-haven demand remains the dominant driver; EUR/USD breakdown below 1.1200 month-range may accelerate if risk sentiment deteriorates.
Euro: Rotation into Dollar cash caps gains against US Dollar – ING
EUR/USD upside capped by continued dollar cash rotation despite US tech weakness; Treasury correlation reassertion limits euro tactical strength.
EUR/USD Price Forecast: Declines below 1.1200 as bearish bias holds below key technical resistance
EUR/USD breaks below 1.1200 technical level ahead of data events; watch for Eurozone retail sales and US nonfarm payroll reactions.