Institutional FX Insights: JPMorgan Trading Desk Views 22/6/26
JPM G10 FX Daily
EUR: Fed and MOU Dust Settles, But Confirmation Is Lacking
The dust has settled a bit after the Fed and Middle East fallout last week.
For the Fed, the issue is straightforward: the market needs data to push hawkish dots into actual rate-hike conviction.
That means July payrolls and CPI matter most.
This week is probably a dud for confirmation.
On the MOU, the weekend already showed how hard it will be to turn the signing into a concrete deal.
I still think they get over the line. But the market is exhausted by the back and forth, and the noise will likely last well into the 60-day extension.
So again, this week may be a dud on that front too.
Portfolio: Still Bullish USD, But Narrowly
On balance, I am still bullish USD in G10, especially against CHF.
But it is narrow.
I do not love many trades at current levels:
EUR can pause into PMIs.
GBP will be politically noisy, but a fair amount of bad news is now priced.
JPY is impossible to short at these levels.
CHF remains the favourite USD long expression.
Against that, I still like the broader growth narrative and therefore retain some EM longs.
In our region:
ZAR still feels like a good fade.
I edged into small HUF longs at decent levels, with room to add.
EUR/USD: Respect 1.1400 Until It Breaks
EUR/USD is up against good support at 1.1400.
Friday’s commentary still holds, so there is no need to regurgitate it.
Let’s see what the PMIs bring.
I will chase a close below 1.1400, but until then I am happy to have reduced shorts and will look to add back on rallies if seen.
Trade bias: Bearish EUR/USD, but reduced into support.
Key support: 1.1400.
Action: Chase close below 1.1400; otherwise sell rallies.
Catalyst: PMIs.
Preferred USD long: USD/CHF.
Risk: PMIs surprise higher and EUR squeezes from support.
GBP: Burnham Wins, Starmer Out, But Positioning Has Shifted
Burnham delivered a resounding by-election victory.
As expected, the focus is now entirely on what Starmer does.
After a weekend full of ministerial posturing, it seems he may be ready to step down.
Speculation was reinforced by a Trump tweet confirming his resignation and “wishing him well”, although No.10 has stressed that nothing has been decided yet.
Even if Starmer goes voluntarily, there are still plenty of questions:
Does he step down immediately?
Does he stretch the process to September, which would be preferable to Burnham?
Is Burnham’s support strong enough that no other candidate can gather the 81 nominations needed to trigger a contest rather than a coronation?
But for UK assets, these questions are secondary.
The bigger issue is Burnham’s choice of Chancellor.
Names in the frame to replace Reeves include:
Miliband
Mahmood
Cooper
Miliband would be the most unsettling for markets.
He has already attracted plenty of media criticism, which may be because insiders think he has the best chance. Let’s see.
We can probably be confident Burnham is in by September.
There is a small argument that a frictionless path could be better for UK assets, because:
It avoids a lame-duck PM for months.
It may reduce the need for leftward campaigning to the Labour membership.
Positioning: GBP Shorts No Longer as Clean
GBP selling picked up sharply last week.
GBP was the most sold currency by short-term hedge funds, accounting for around 70% of net USD purchases.
That sector has now wiped out over 90% of the length rebuilt since mid-May.
So the positioning picture is no longer as clean for GBP shorts.
Also, Burnham appears to be surrounding himself with more sensible people, including Hughes, O’Neill and Haldane.
That raises the hurdle for a decent further GBP move lower.
I am now square EUR/GBP and would trade the gyrations more tactically from here.
We should hear from Starmer this morning.
Levels:
Cable next support: 1.3160/75
Then the market starts talking about 1.3000
EUR/GBP range: 0.8600/0.8700
Trade bias: Square EUR/GBP; tactical only.
EUR/GBP range: 0.8600/0.8700.
Cable support: 1.3160/75, then 1.3000.
Politics: Starmer decision expected; Burnham likely in by September.
Risk: Miliband as Chancellor would be most unsettling for UK assets.
JPY: Knocking on 162, MoF Risk Is Live
End of last week saw USD/JPY accelerate through 161.
Suddenly, we are knocking on the door of 162, a level USD/JPY has not seen for 40 years.
Thursday night’s spicy price action bears the hallmark of a rate check.
But as with the prior suspected episode around the clearing of 160 over NFP earlier this month, the recovery has been aggressive.
We are nearing an inflection point.
MoF must know that anything short of bold action risks a significant acceleration in JPY weakness.
We keep hearing from Katayama, but it is really Mimura we need to hear from.
I am not positioned here, but I would be very surprised if they let it go.
They will feel that the energy complex is on their side, and they will also know that JPY shorts have built to fairly decent levels now.
Trade bias: Not positioned.
USD/JPY: Near 162, historic level.
MoF: Bold action risk rising sharply.
Positioning: JPY shorts rebuilt.
Risk: Break of 162 without intervention triggers acceleration.
CHF: Favourite Short Remains Intact
No change in view.
CHF remains one of our favourite shorts, alongside CAD and EUR, after last week’s hawkish Fed.
Flow-wise, we continued to see better demand for USD on Friday, as well as decent CHF selling from:
Real money
Hedge funds
There is not much on the Swiss calendar this week, so CHF should continue trading with broader risk sentiment and USD dynamics.
Trade bias: Short CHF / long USD/CHF.
Driver: Hawkish Fed and low-yield funding status.
Flow: RM and HF CHF selling.
Calendar: Light Swiss week.
Risk: Sudden risk-off revives CHF haven demand.
AUD / NZD: AUD/NZD Still Looks Higher
Regular readers know I have been long AUD/NZD.
The view is that AUD should outperform on a relative-value basis due to its high-yielding status.
The technical close above the 50dma near 1.2158 last week was encouraging and suggests a test of the year’s high at 1.2288.
AUD’s RV performance is even more encouraging when looking at internal flows.
SHFs have been relentless AUD sellers since mid-May and are now at their shortest year-to-date.
That creates scope for a positioning squeeze if the macro story holds.
I have also long held the view that Australian superannuation fund hedging would be an enduring theme.
It was therefore interesting that hedge ratios were unchanged in Q1 at 23.2%.
Given comments from the sector suggesting a structural rethink on hedge strategies, I would treat Q1 as consolidation rather than anything more sinister.
Q2 flows will be even more important to monitor.
This week’s focus:
Australia employment data on 25 June
May inflation 24 hours earlier
Remember, though, the RBA focuses on the quarterly inflation print.
A close back below 1.2150 in AUD/NZD would be disappointing.
Trade bias: Long AUD/NZD.
Technical trigger: Close above 50dma near 1.2158.
Target: 1.2288 year high.
Risk level: Close below 1.2150.
Positioning: SHFs shortest AUD YTD.
Catalysts: Australia inflation and employment.
CAD: USD/CAD Still a Favourite Long
USD/CAD longs remain one of my favourite trades.
The pair has delivered an incredible performance over the past six weeks.
Last week’s more hawkish Fed further reinforced US-Canada divergence and gave USD/CAD the boost needed to push toward fresh recent highs.
The US-Iran deal and subsequent drop in oil prices should be another catalyst pressuring CAD.
I remain short CAD.
Flows were mixed on Friday.
All eyes are now on Canadian CPI this afternoon.
Trade bias: Long USD/CAD / short CAD.
Drivers: Hawkish Fed, weaker Canada, lower oil.
Catalyst: Canadian CPI today.
Risk: Hot Canadian CPI or oil rebound squeezes CAD shorts.
SEK / NOK: Core NOK/SEK Longs, But Watch Brent
Not much to add.
I retain core long NOK/SEK.
The view remains that NOK should outperform on a relative-value basis due to its high-yielding status, especially against SEK, where the yield differential is at historical highs.
Energy prices are driving NOK at the moment.
It is no coincidence that NOK/SEK consolidated within 0.9820/0.9910 last week while Brent consolidated between $76.50/$82.40.
Those are the levels to focus on for adding or reassessing.
Trade bias: Core long NOK/SEK.
NOK/SEK range: 0.9820/0.9910.
Brent range: $76.50/$82.40.
Rationale: Historical yield differential supports NOK over SEK.
Risk: Brent breaks lower and drags NOK with it.
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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!