Global FX: Considering spillover from geopolitics to FX

We discuss the impact of recent geopolitical developments on FX markets. The euro bloc is the most vulnerable, while the dollar and commodity currencies are more insulated. We are recommending shorts in EUR, GBP and SEK vs. longs in USD, CHF and G10 petro FX. Deterioration in risk sentiment would usually be more JPY-supportive, but higher energy prices are an offset. We also discuss the main take-aways from our FX models. The growth and market regimes have turned outright defensive, and risks to the dollar are skewed asymmetrically stronger. Models were already short EUR to begin with, but magnitude of shorts have increased on growth revisions. Speakers Paul Meggyesi, Global FX Strategy Meera Chandan, Global FX Strategy   This was recorded on March 7, 2022. This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2022 JPMorgan Chase & Co. All rights reserved.