Institutional FX Insights: JPMorgan Trading Desk Views 23/1/26
USD: Better US data produced “interesting” USD price action, but it reinforces her medium-term weaker USD view because growth upgrades and decent data still aren’t translating into sustained USD support.
- USD structural theme: The investment/hedging narrative is building (pension funds reducing US exposure; latest example: Ontario Teachers). Implication: weak US data may matter more for USD going forward than strong data helps.
- EUR: Morning PMIs were mixed (France miss, Germany beat), giving modest EUR support; broader tone still tied to USD softness rather than a pure EUR story.
- AUD/NZD positioning: Both AUD and NZD are overbought after a strong YTD rally; she reduced some exposure (tactical risk management / take profit).
- AUD: Australia PMIs “jumped” overnight, supportive. She views a pullback to 0.6760/0.6780 as a “healthy correction” to re-add. Key near-term catalyst remains next week’s Australian inflation print (more crucial for momentum than NZ’s).
- NZD: NZ inflation printed 0.4pp above RBNZ forecast; new Governor Breman didn’t push back, so market now prices 2 hikes in 2026—yet NZD is lower this morning (signal: “buy the rumor, sell the fact” / crowded long / overbought). She’d re-add on a move toward the 200-day ~0.5867.
- NZD soft signal: She’s getting “a few questions” on NZD this morning—often a tell that the market is crowded/late to the move.
- GBP rates/politics: Gilts got “spicy” on Burnham/MP rumor headlines; quickly faded as procedurally unlikely and Burnham cooled it. But the point is the market is nervous about UK political succession risk (post Starmer/Reeves), which could become more relevant into May local elections.
- GBP stance: They have largely stepped aside from cross longs for now. Strong UK sales, plus stable LFS and CPI, doesn’t support a sterling-bear view near term; PMIs at 09:30 GMT are the next catalyst.
- GBP levels: EURGBP 200D = 0.86465 support, with 0.8750 above as resistance zone. Cable range 1.34–1.355 remains intact.
- JPY intervention read: She doesn’t think MoF intervened; more likely a rate check. Reasoning: ordinary primary volumes; letting spot settle 100 pips lower isn’t typical intervention behavior.
- BoJ read-through: Outcome broadly didn’t change the narrative (JPY/JGB concern persists).
- Held as expected; Takata hawkish dissent
- Inflation forecasts unchanged; growth forecast raised
- Ueda flagged “April price behavior” as relevant to hikes; ~**17bp** priced
- FX jawboning language had little impact
- QE/yield-formation comment noted but not new; market sensitive anyway
- Neutral rate comment “no big shift” = steady messaging
- USDJPY playbook: Treating it as more of a trading market now; trigger expectations closer to 160 than 162. Staying long USDJPY with tighter respect for headline/tape risk.
- USDJPY levels: 157.30 support, then cloud around 155.92 below; topside levels “obvious” (market focused on 159/160 area).
- CHF: CHF outperformed USD and EUR despite risk-on/de-escalation headlines; attributed to broad USD selling and preference for strong fiscal-backdrop currencies. Systematics also ended a 4-day CHF selling streak and bought CHF.
- CHF stance/level: She’s out of CHF longs (frustrating rally) but retains bias to be long CHF as best FX safe haven and EM hedge. Looking to sell USDCHF rallies toward 0.7985/0.800.
- CAD: USDCAD downside continues; notable persistent real-money CAD demand (CAD bought 10 of last 11 sessions), pushing USDCAD below 1.38. Her conviction in short CAD is lower, but she maintains a small short CAD mainly as a hedge against high-beta longs due to Trump–Carney tension headlines.
- SEK/NOK: Both strengthened again as the US exposure reduction / FX hedging narrative gains momentum (again citing Ontario Teachers). She remains short EURSEK and EURNOK but trimmed due to oversold conditions and elevated Swedish unemployment (risk management, not thesis change).
- SEK/NOK add-back levels: Wants room to add on pullbacks toward 10.65/10.70 in EURSEK and 11.70 in EURNOK.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!