Currencies

MacroQuant recommends a slight underweight to equities and an overweight to bonds and cash. The model is bullish on the US dollar, negative on gold, very negative on copper, and neutral on oil.

GBP offers attractive carry today, but the market’s aggressive rate hike pricing is likely to turn into a headwind within 12 months. Our latest Currency Chartpack examines the valuation, growth, rate, and policy drivers of the pound, showing why the long-term outlook is less rosy than near-term data implies.

Markets expect the BoC to hike by 100 bps over the next year; we do not. Housing and labor weakness argue for owning Canadian bonds now, while Carney’s reforms and a resource capex wave make the CAD and resource stocks multi-year winners.

Our G10 FX cyclical scorecard still favors high-carry currencies over low yielders, suggesting patience should continue to pay. We break down the factors driving each currency and highlight the most appealing relative-value opportunities.

Politics, wars, a global tightening cycle, doubts over AI capex: the wall of worry keeps rising. But the spark that would topple risk assets is missing. Our Q4 FICC outlook explains why to stay long risk, and where the danger lies.