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Japan CPI inflation falls as expected in Dec, points to ultra-dovish BOJInvesting.com-- Japanese consumer inflation ease...
01/19/2024

Japan CPI inflation falls as expected in Dec, points to ultra-dovish BOJ

Investing.com-- Japanese consumer inflation eased as expected in December, furthering bets that the Bank of Japan will keep its ultra-dovish policy largely unchanged when it meets in the coming week.
Core consumer price index (CPI) inflation, which disregards volatile fresh food prices, rose an annualized 2.3% as expected in December, data from the Statistics Bureau showed on Friday. The reading fell further from the 2.5% seen in November.
The core CPI index was also at its lowest level since July 2022.
A core reading that disregards both fresh food and energy fell to 3.7% from 3.8% in the prior month. The reading is closely watched by the BOJ as an indicator of underlying inflation, and was now well below a 40-year peak hit in 2023.
Headline CPI inflation fell to 2.6% in December from 2.8% in the prior month.
Softer fuel and utility prices were the key drivers of easing inflation, while food prices continued to grow at a rapid pace. Utility prices were also brought lower by government subsidies on electricity and gas, which were introduced in 2023 to help curb inflation.
Friday’s reading gave further credence to expectations that the BOJ will keep its ultra-dovish policy unchanged when it meets this coming Tuesday. Easing inflationary pressures and recent signs of sluggish wage growth give the BOJ little urgency to begin tightening policy.
The central bank is also expected to hold its ultra-dovish course amid uncertainty after a devastating earthquake at the beginning of the year. Rebuilding and stimulus measures in the wake of the disaster are widely expected to offset any monetary tightening by the central bank.
The BOJ is set to decide on monetary policy on Tuesday.
Still, increased fiscal stimulus may push up Japanese inflation in the near-term. Renewed weakness in the yen through January may also elicit a stronger inflation reading for the month.
The yen traded sideways after Friday’s inflation reading, but was close to its weakest levels since early-December.
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Global payments company: GBP may benefit from elections due in the second half of the yearGlobal payments company Argent...
01/19/2024

Global payments company: GBP may benefit from elections due in the second half of the year

Global payments company Argentex says 2024 will be marked by further resilience for the pound and could benefit from elections due in the second half of the year.
In a research report setting out forecasts and scenario analysis, Joe Tuckey, head of foreign exchange analysis at Argentex, said that the 2024 elections in the United Kingdom and the United States will have a significant impact on the foreign exchange market.
"In the UK, Labor's indication that they will integrate more closely into Europe is seen as a potential positive for the pound," he said. "With a general election approaching, possibly in the autumn, certain sterling-positive themes may emerge and be priced in," he added.

For analysts, Trump's return could re-disturb the relative calm of the Biden era, and U.S. markets could become more volatile.
"Markets could become particularly concerned if Trump insists on withdrawing from NATO and withdrawing support for foreign wars, thereby putting more fiscal pressure on other economies," he explained.
Argentex's base-case GBP/USD forecast for 2024 suggests that the pound will continue to maintain its recent resilience, gradually rising as the dollar weakens.
The Bank of England will maintain a more dovish stance than the Fed, while economic data is likely to remain "flat" but in line with expectations for modest economic growth in 2024 of 0.5% to 1%.
"The UK will once again successfully avoid the annual doom and gloom narrative as falling interest rates, falling inflation and low unemployment continue to drag on the post-Brexit recovery," Tuckey said.
(Image source: Argentex)
Argentex's base case forecasts GBP/USD in a range of 1.30-1.33.
However, if inflation remains higher in the UK, which could mean the Bank of England cuts interest rates later and to a smaller extent than some other G10 central banks, then a bullish scenario of 1.35-1.37 could emerge.
A pessimistic scenario could lead to 1.18-1.20. This scenario could involve a major economic slowdown and a bond sell-off as markets question election-related fiscal changes.
Regarding the outlook for the GBP/EUR exchange rate, Argentex believes that the broad fundamental drivers in both countries are likely to remain similar, with growth expectations ranging from +0.5% to 1%.
(Image source: Argentex)
With deflation heading steadily toward 2%, the central bank is expected to cut interest rates through 2024. Economic data can be a complex picture, depending on employment, energy prices, consumer behavior and global demand themes.
"The Bank of England is leaning towards being less dovish and the ECB is likely to remain, while there could be an election rally later this year," Tuckey said.
Argentex expects GBP/EUR to trade in a range of 1.15-1.17, but if the 'sticky' inflation scenario mentioned above emerges, a bullish scenario of 1.18-1.19 is possible.
Another bullish scenario would see a new Labor government drive sterling higher amid "replacement" and "market-friendly" pricing, Tuckey said.
A pessimistic scenario would lead to 1.12-1.14 as the ECB is unable to deliver as many rate cuts as the market expects.
"The euro will strengthen as underperforming economies such as Germany start to outperform downturn expectations," Tuckey said.

Occidental Petroleum sounds supply alarm: global oil shortage expected in 2025Tongcaijing APP has learned that Vicki Hol...
01/17/2024

Occidental Petroleum sounds supply alarm: global oil shortage expected in 2025

Tongcaijing APP has learned that Vicki Hollub, CEO of the US oil and gas giant Occidental Petroleum Company (OXY.US), said at the World Economic Forum in Davos, Switzerland, on Tuesday local time that if global oil exploration activities continue to fail to keep up with market demand, , the global oil market may face a sharp shortage of oil supply starting in 2025.

"In the short term, the oil market is also unbalanced, but tends to be oversupplied," Hollub said. "But the imbalance between supply and demand may still occur in 2025 and beyond, and the world may be experiencing an oil supply shortage."

The CEO explained that from the mid-1950s to the late 1970s, global oil companies discovered approximately five times more oil than they consumed, but by 2023 this had steadily declined to just around 25% .

According to Hollub, U.S. oil companies have shifted from exploration to focusing on extracting shale oil reserves since 2012. However, the overall life of U.S. shale oil reserves is much shorter than conventionally produced oil.

Hollub warned in an interview that the oil market will completely shift from a short-term oversupply situation to a long-term oil supply shortage situation where the world needs more oil.

The crisis in the Middle East is difficult to break, will international crude oil prices continue to rise?

Since the Palestinian Hamas organization attacked Israel in early October, tensions in the Middle East have continued to escalate, and the situation has become even more complicated after the United States and the United Kingdom air strikes on Houthi armed strongholds. The price of Brent crude oil, the international crude oil benchmark, tends to fluctuate, sometimes rising strongly and sometimes weakening sharply, mainly due to market hesitation. Some traders once believed that the situation in the Middle East was close to calming down and would not interfere with the trend of oil prices. Others There are fears there will be more disruption to shipping and that the conflict could expand into a wider regional conflict.

Chevron CEO Michael Wirth recently stated at the Davos Forum that the Red Sea crisis has brought serious risks to the liquidity of petroleum products. If tensions lead to serious supply disruptions in the Middle East, national crude oil prices may change rapidly. Goldman Sachs has warned that a prolonged disruption near the Strait of Hormuz could double crude oil prices from current levels, although the Wall Street investment bank believes this is unlikely to happen.

Robert Rennie, head of commodities and carbon research at Westpac, said: "The United States and Britain had warned of action if the Houthi rebels continued to launch attacks, so this action was actually not unexpected." Rennie said, By the end of 2023, the market may be too focused on global supply growth, while a sharp deterioration in the Red Sea situation has been underestimated until 2024. With the Houthi leader stating that any U.S. attack would not go without a response, WTI crude oil prices could rise above $75 a barrel (WTI is currently hovering around $72) and Brent crude oil prices due to shipping disruptions caused by the situation in the Red Sea Possibly above $80 (Brent currently hovers around $77).

Citi, a major Wall Street bank, tends to be bearish on international crude oil. Citi recently lowered its 2024 Brent crude oil price forecast by US$1 to US$74/barrel, and lowered its 2025 forecast by US$10 to US$60/barrel. However, Citi said that recently Armed activities by various parties in the Red Sea may lead to further tensions in the Middle East, and risk premiums may rise in the short term.

Citi analysts said: “We believe that weakening market fundamentals, in the absence of major supply disruptions, will lead OPEC+ to extend the first quarter of 2024 production cuts throughout 2024 and only begin to reduce production in the second half of 2025. .” The analysts also noted: “While OPEC+ may extend production cuts, there will still be a large surplus, which may make it increasingly difficult for Brent crude oil prices to maintain a price of $70/barrel in our base case.”

Analyst: Be cautious about the outlook for gold prices to “double and soar”, but it seems to be close to a phased bottom...
01/17/2024

Analyst: Be cautious about the outlook for gold prices to “double and soar”, but it seems to be close to a phased bottom

Bob Moriarty, founder and analyst of a precious metals finance website, outlined his investment layout plan for 2024, emphasizing that the precious metals market has shown negative sentiment in the past three weeks. He called on investors to be cautious about the prospect of a doubling of gold prices, emphasizing that they will only become cheap when dramatic events occur in the financial system.

Bob agrees with the common view among many in the market that the U.S. domestic economy may enter a recession in 2024.

“The past three weeks have been negative for the gold and silver markets from a sentiment perspective. The signals are that we are close to a bottom, and I believe that to be true. But it is just a belief, and if it is true, Then there are a large number of junior miners who are about to explode higher," he said in his outlook.

He continued: “Have you ever heard the saying ‘prices are always right, opinions are often wrong’? It’s strange that so many gold cheerleaders, close to hundreds of them, are constantly talking about manipulation and suppression , they give investors the idea that somehow the price of silver/gold will double or triple overnight.”

"However, this is not true."

Bob explained to investors that if you carefully examine the price charts of nine different metals, including aluminum, iron, copper, nickel, zinc, gold and silver, you will find that gold and silver have performed best on most time frames over the past hundred years. Inside is rising.

He emphasized: "It is a fiction to say that gold and silver are cheap. They will only become cheap when something dramatic happens in the financial system."

"I believe that's actually going to happen, but that's what it takes to move gold and silver prices."

He also noted that contrarian investing can be crucial to successful speculation, and traders can mix sentiment indicators to identify key market turning points.

In addition to the gold market, Bob also mentioned the US stock market. He suggested that when the VIX volatility index approaches 10, the market needs to pay attention to the U.S. stock market below.

David Haggith, author of The Great Recession Blog, pointed out that every major U.S. bank's fourth-quarter 2023 report exceeded the threshold for one reason or another, helping stock investors find exit opportunities. As the yield curve begins to invert, people are noticing that recession risks are higher than thought.

"Banks collapse, inflation heats up and global warming freezes over faster than hell," he warned.

He made an important point about "why the Fed has made it clear that it has zero intention of cutting interest rates in March" and that all greedy investors are constantly daydreaming about the pivot, "I don't understand these circumstances over the past six months. , how that translates into a rate cut by the Fed in just over two months.”

The world is ushering in the largest "election year" in history! JPMorgan: The global economy and stock markets will be ...
01/15/2024

The world is ushering in the largest "election year" in history! JPMorgan: The global economy and stock markets will be under pressure

Financial Associated Press, January 15 (Editor Liu Rui) 2024 is the largest "election year" in global history.

According to statistics, more than 50 countries and regions around the world will stage election dramas this year. Among them, elections in major countries such as the United States and Russia have affected the world's nerves. This year’s elections in various countries will cover nearly half of the world’s population, and are expected to be the year with the most elections and the broadest coverage of the population in history.

JPMorgan Chase wrote in a recent report that as we enter this "election year", elections in many countries are expected to have a significant impact on the economy and stock markets. The global economy is expected to face downward pressure, while stock markets are likely to exhibit more volatility.

Global economic growth is under pressure

In addition to the general elections that will be held in the United States and Russia in November and March respectively this year, the new European Parliament elections will also be held from June 6 to 9. British Prime Minister Rishi Sunak also recently revealed that his plan is to hold general elections in the second half of this year. In addition, many countries such as Mexico, Indonesia, and South Africa will also hold general elections this year.

JP Morgan strategists wrote in a report that four trends are likely to continue in the election results in many countries around the world - polarization, populism, democratic deterioration and geoeconomic fragmentation .

They wrote:

"Many elections are likely to be close ones. Some countries recognize that populists cannot achieve their goals, while others remain fascinated by populists. But overall, we think these trends are unlikely to change , so we believe the election fever in 2024 will ultimately have a negative impact on global growth, depressing the performance of growth stocks relative to value stocks ."
The report said populist regimes often push for large-scale policy reforms, which tend to drive up inflation in the short term. They also mean more borrowing and trade restrictions, which are downward forces on global economic growth.
The U.S. election has the greatest impact

Of all the elections, JPMorgan expects the U.S. election to be the most important. Judging from the current poll results, this year's US election is likely to see another showdown between Biden and Trump.

The report stated:

“We believe the U.S. election is more consequential and worth hedging than any other election, as a Trump victory could have broader macro implications, including undoing or reversing many of Biden’s policies through a series of executive orders policy ."
One of Trump's expected policies is to impose general tariffs of 10%, which is expected to trigger a full-scale trade war. If implemented, this could push the U.S. dollar up 4%-6% in the foreign exchange market. At risk of depreciation will be the yuan, the euro and the Mexican peso .
Uncertainty over U.S. and other global elections will also cause VIX to rise, while a potential recession will worsen the situation. JPMorgan strategists found that the volatility of the S&P 500 is 2 points higher in U.S. election years than in non-election years.

"As such, investors looking to position themselves for election uncertainty and a resurgence of populism should prepare for higher risk premiums and higher market volatility," the report said.
Deterioration of democracy will lower stock market returns
In addition to populism, JPMorgan Chase said that another key theme to watch in this election year is the continued erosion of "democracy indicators", which will also have an impact on the market.

JPMorgan Chase cited the findings of independent watchdog organization "Freedom House" and others, saying that the decline of global democracy and freedom has become a trend in the past 17 years.

"Weaker governance contributes to higher volatility and lower price-to-earnings ratios, and we find that after a democracy indicator downgrades, stock returns over a 10-year period are on average 5% lower than in countries that upgrade this indicator," JPMorgan said.

There is a "death cross" on the daily chart of the US dollar. Let's see what analysts say.A closely watched indicator of...
01/15/2024

There is a "death cross" on the daily chart of the US dollar. Let's see what analysts say.

A closely watched indicator of the U.S. dollar's performance against other major currencies showed a "death cross" on the daily chart on Friday (Jan. 12) - an ominous technical development that is often seen as a trend. Confirmation of negative changes.

The Intercontinental Exchange (ICE) U.S. Dollar Index DXY, which tracks the U.S. dollar against a basket of six major currencies, was trading around 102.16 in early U.S. trading on Friday, down 0.1% on the day, but has risen by about 0.8% since the beginning of the new year. The index fell sharply in December.

This price action brought the index's 50-day moving average close to or below its 200-day moving average near 103.40, triggering a death cross (see chart below).

While death crosses sound bearish, currency analysts question whether they provide much of a signal, preferring instead to confirm a downward trend that has already begun. The U.S. dollar index hit the so-called golden cross at the end of September last year, when the 50-day moving average rose above the 200-day moving average, which is considered a positive indicator.

Data going back to 1985 shows that death crosses do tend to see the index decline in the subsequent 1-month, 3-month and 6-month periods. The U.S. dollar index fell 1.2% over the next month, 1% over the next three months and 0.4% over the six months, according to Dow Jones Market Data. The probability of decline in 1 month and 3 months is 60%, and the probability of decline in 6 months is 52%.

Brad Bechtel, global head of foreign exchange at Jefferies, said in a note: "In my opinion, the death cross is generally a relatively meaningless indicator because I don't think its predictive power has any value, but you You may hear about it in the media."

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in a note that the death cross is a lagging indicator and "does not necessarily mean that the dollar will not rebound." "

On the contrary . "I think the Fed's dovish expectations have been much ahead of schedule since late last year and the dollar has some room for a positive correction," she said.

The dollar fell sharply in December as investors expected the Federal Reserve to cut interest rates by about 25 basis points in 2024.

Dollar gains before inflation data, bitcoin slipsBy Karen BrettellNEW YORK (Reuters) - The dollar rose against the euro ...
01/10/2024

Dollar gains before inflation data, bitcoin slips

By Karen Brettell

NEW YORK (Reuters) - The dollar rose against the euro and yen on Tuesday as traders awaited inflation data on Thursday for clues on when the Federal Reserve is likely to cut rates.

In cryptocurrencies, bitcoin dipped but remained near its strongest level since April 2022 as anticipation mounted the Securities and Exchange Commission will imminently approve spot bitcoin exchange-traded funds (ETFs).

The dollar index had hit a five-month low in December when investors priced for the likelihood that the Fed will cut rates sooner rather than later as inflation eases closer to its 2% annual target and economic data shows signs of softness.

It has recovered from some of that weakness this year, with the sell-off seen by some as overdone heading into year-end. But Fed expectations are likely to continue to drive dollar moves.

“Throughout December the theme was really the Fed pivoting amidst weaker data,” said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto.

“At this point we’re pricing in a significant amount of easing from the March meeting and the risk/reward is tilted to a degree. Maybe there are some market participants out there that look at what’s priced in and are easing up on their dollar shorts that were initiated in December,” he added.

The release on Thursday of the consumer price inflation report for December will be the main piece of economic data this week. It is expected to show headline inflation rose 0.2% in the month and by 3.2% on an annual basis.

If the data confirms that inflation is continuing to moderate it could boost expectations for a March rate cut, though if it comes in above expectations it could also reverse some of that pricing.

Fed funds futures indicate a 64% probability of a March rate cut, down from 70% a week ago, according to the CME Group’s FedWatch Tool.

"The market is still trying to find its feet in terms of the trajectory and timing of the first U.S. rate cut," said Kamal Sharma, senior G10 FX strategist at Bank of America (NYSE:BAC), who expects the Fed to start cutting rates at the March meeting.

"Our base case scenario is for a soft landing, lower dollar, bull steepening and that broadly should be supportive of risk assets more generally," Sharma added.

Data on Tuesday showed that the U.S. trade deficit unexpectedly narrowed in November as imports of consumer goods fell to a one-year low amid slowing domestic demand, a trend that, if it persists in December, could result in trade having no impact on economic growth in the fourth quarter.

The U.S. dollar index, which measures the greenback against a basket of six currencies, was last up 0.26% at 102.57.

The euro dipped 0.23% to $1.09250, while sterling slipped 0.39% to $1.26990.

In Asia, data on Tuesday showed core inflation in Japan's capital slowed for the second straight month in December, taking some pressure off the Bank of Japan to rush into exiting ultra-loose monetary policy.

The dollar was last up 0.25% at 144.54 yen.

Bitcoin fell 0.26% to $46,874, after reaching a 21-month high of $47,281 on Monday.

Investment managers had on Monday disclosed the fees they plan to charge for their proposed spot bitcoin ETFs, in another step toward approval this week by the U.S. securities regulator.

Japan’s Nikkei 225 surges to 34-year high as BOJ pivot bets fadeInvesting.com-- Japan’s Nikkei 225 stock index rose shar...
01/10/2024

Japan’s Nikkei 225 surges to 34-year high as BOJ pivot bets fade

Investing.com-- Japan’s Nikkei 225 stock index rose sharply on Wednesday, reaching levels seen before the burst of a speculative bubble in the 1990s as investors bet on a delay in the Bank of Japan’s plans to end its ultra-loose policies.

The Nikkei 225 index jumped 1.3% and crossed the 34,000 level for the first time since January 1990, extending a raft of gains seen since mid-2023.

Technology stocks were the best performers, fueled by a mix of hype over artificial intelligence and amid growing hopes for softer U.S. inflation data later this week.

But the biggest source of support for the Nikkei was growing expectations that the BOJ will have to delay plans to end its ultra-dovish policy, following a devastating earthquake in central Japan which killed hundreds of people and caused widespread destruction in the region.

Rebuilding and fiscal stimulus efforts in the wake of the disaster are widely expected to offset any notion of monetary tightening by the central bank. The BOJ had maintained its ultra-dovish stance through 2023 despite shifting global sentiment.

An ultra-dovish BOJ was a key driver of Japan’s stock rally through 2023, as the central bank maintained its asset buying and yield control policies even as most of its global peers began hiking interest rates and ending pandemic-era stimulus measures.

Bets on a dovish BOJ were furthered this week by data showing declines in Japanese inflation and wage growth.

The Nikkei 225 was the best-performing major stock index in 2023, rallying about 30% for the year. In comparison, the S&P 500 added about 24%.

Strong corporate earnings from Japan also factored into the Nikkei’s 2023 rally, as local firms weathered a decline in global economic conditions. Slowing demand in China was a key pain point for Japanese exporters.

But Japanese businesses were also aided by a rebound in tourism, as foreign travelers flocked to the country to capitalize on a severely weakened yen. The yen was the worst-performing major currency in 2023 as it was battered by a growing rift between local and U.S. interest rates.

Still, the Nikkei’s 2023 rally comes after nearly 30 years of underperformance, as Japanese economic growth stagnated after the burst of a massive speculative bubble in the 1990s.

Recent data suggests that Japan’s economy may be cooling after seeing some strength through 2023. Gross domestic product shrank more than expected in the third quarter of 2023.

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The market reassessed the differences between the monetary policies of the United States and Japan, and the weakening tr...
01/05/2024

The market reassessed the differences between the monetary policies of the United States and Japan, and the weakening trend of the yen intensified

Zhitong Finance APP has learned that the yen's decline looks set to intensify in the coming weeks as traders recalibrate their expectations for U.S. and Japanese monetary policy.

A key options-based short-term positioning indicator showed traders were the least bullish on the yen since August, with speculative accounts from Japan to the United States selling the yen on Thursday. However, there is still room for the yen to weaken further, with technical indicators showing that a rebound late last month pushed the yen into overbought territory.

It all comes down to the diverging trends in Japanese and U.S. monetary policies. The possibility of the Bank of Japan exiting negative interest rates as early as January now seems unlikely, given that Japan has recently suffered a severe earthquake and the government is mobilizing aid. In the United States, expectations for a rate cut by the Federal Reserve are easing in light of solid employment data, causing the 10-year Treasury yield to exceed 4%. This has helped the U.S. dollar outperform other major currencies, while the Japanese yen has lagged.

"The rise in USD/JPY has more to do with the pickup in U.S. yields than Japan-specific reasons," said Aroop Chatterjee, macro strategist at Wells Fargo in New York. "The market may have priced in too much of a Fed rate cut too quickly," he added.

It is understood that when market conditions change, such as changes in the direction of interest rates or expected adjustments in monetary policy, investors and traders will quickly adjust or close their trading positions to adapt to the new conditions, resulting in a surge in trading activity. CME futures trading volume on Wednesday reached its highest level since Dec. 19. Meanwhile, yen options activity on Thursday was the highest since Dec. 14, according to data collected by the Depository Trust & Clearing Corporation.

The yen fell as much as 1.1% against the dollar on Thursday, falling to its lowest level in more than two weeks. The yen has fallen more than 2% this year.

The yen's underperformance in currency markets is a familiar story. Analysts ended each of the past two years bullish on the yen, but that optimism faded as it became clear that bond markets were overheated. In 2022, a dramatic shift in Bank of Japan policy brought new calls for yen strength; in 2023, bullish bets on the yen increased in anticipation of Fed policy easing.

Alan Ruskin, macro strategist at Deutsche Bank, said: "It feels like everything is repeating itself, and the trading market in early 2024 will be mainly affected by whether the U.S. bond market bulls were correct in late 2023, or whether the market overreacted."

Morgan Stanley: Outlook on the U.S. dollar adjusted to neutral from bullish, with yen expected to strengthenMorgan Stanl...
01/05/2024

Morgan Stanley: Outlook on the U.S. dollar adjusted to neutral from bullish, with yen expected to strengthen

Morgan Stanley, one of the few banks still bullish on the greenback, downgraded its outlook for the greenback as Treasury yields fell amid a dovish shift by the Federal Reserve.

The bank revised its outlook on the U.S. dollar to neutral from bullish , noting that seasonal and short-term positioning could still drive further gains . The bank has been betting on a stronger dollar since mid-November, having previously forecast the dollar index rising about 8% from current levels in the second quarter. Outlook #

Hedge funds and banks, including Goldman Sachs, turned bearish on the U.S. dollar in December after Federal Reserve Chairman Jerome Powell signaled a rate cut this year. The U.S. dollar index subsequently rebounded over the first four days of January but fell 0.2% on Thursday.

“Our confidence in U.S. dollar strength has weakened significantly,” strategists including David Adams wrote in a memo published on January 4. “The deceleration in U.S. data has compressed growth differentials, with U.S. interest rates have fallen further compared to peers, and investors appear far from ready to defend based on equity returns."

Fidelity International, JPMorgan Chase & Co. and HSBC were among a handful of fund managers that went against consensus in December, warning that the dollar would unexpectedly strengthen in 2024 as the U.S. economy outperformed expectations. In a Bloomberg survey, most analysts held a bearish view on the dollar.

Morgan Stanley also closed its short EURUSD trade recommendation, recommending that investors opt for short EURUJPY positions. The bank predicts the yen will strengthen as U.S. interest rates fall , while the euro will fall as the euro zone economy continues to weaken .

"Uncertainty about the outlook for the U.S. dollar does not change the fundamentals of the other G3 currencies," Adams said.

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