Macro Trade Recommendations

Macro Trade Recommendations

• Our portfolio has fared reasonably well over the past week, with renewed USD strength offsetting mixed performance across our pro-carry positions.
• This week’s strong US data and more hawkish Fedspeak validated our USD-bullish bias and suggest scope for further near-term Fed repricing; hold longUSD basket (vs CAD & SEK) into US payrolls.

• The stronger dollar has pressured EM FX while supporting CAD on crosses, triggering the take-profit stop on our short CAD/MXN position…
• … but stay long USD/CAD given still-aggressive BoC pricing that is not reflective of underlying Canadian fundamentals.
• We scale up DM carry exposure by re-entering long NOK/SEK after this week’s Norges Bank and Riksbank decisions were net supportive…

• … and remain short SEK/JPY as recent rate checks and USD/JPY’s renewed approach towards 160 raise the prospect of yen-supportive policy support.
• CHF should remain under pressure in a highergrowth, higher-yield global backdrop and the SNB sig-

Our tactical conviction in USD length has increased as strong US data, more hawkish Fedspeak, and persistent cussed last week, this warrants holding USD length through

Figure 1: Fed OIS pricing has moved higher in response to stronger US data this week and now looks for ~4 additional hikes over the next

Figure 2: Some of the USD discount observed in recent months has shown signs of slightly reversing

But we stop short of adding fresh USD exposure as the broader global growth backdrop remains constructive and the dollar is already approaching local highs against several currencies. The US was clearly the standout in this week’s PMIs, but the improvement was not confined to the US, with the Euro area composite also exceeding expectations and pointing to a broader pickup in activity. More broadly, the global cycle remains supported by strong corporate profits, expanding capital expenditure and improving hiring indicators, while our economists have raised their secondhalf global growth forecast by 0.5%-pt since midyear (see Global Data Watch). This should provide some support for cyclical FX even as higher yields continue to favor the dollar against lower-yielders. Recent geopolitical developments have also skewed risk-positive on net: US-China engagement has helped contain near-term trade escalation, while seemingly-constructive US-Iran discussions preserve a possible diplomatic off-ramp. Material progress with Iran could pose a tactical risk to the USD through lower energy prices and yields, but we note that 1) this has not yet materialized, and 2) the CAD leg of our basket should provide some insulation given its vulnerability to lower oil prices. October seasonality

USD TWI with 60% hit-rate since 2011), particularly later in the month, but is less compelling than the late-September window now passing (Figure 3October seasonality retains a modest dolar-positive tilt, but is les compeling than the late-September window now pasing…

, Figure 4…

with most of the USD-suportive move taking place towards the end of the month). We therefore hold our existing USD length (with a tighter take-profit stop) rather than adding fresh exposure at this juncture.

Figure 3: October seasonality retains a modest dollar-positive tilt, but is less compelling than the late-September window now passing…

Figure 4: … with most of the USD-supportive move taking place towards the end of the month

The stronger dollar has pressured EM FX while supporting CAD on crosses, triggering the take-profit stop on our short CAD/MXN position; stay long USD/CAD given stillaggressive BoC pricing that is not reflective of underlying Canadian fundamentals. We were stopped out of CAD/MXN at a profit this week (adding to the gains realized from this theme since we first recommended the trade last September) as the pair reached new multi-month highs above 12.50. The move primarily reflected US and global developments, but MXN-specific concerns around potential US diesel-export restrictions also played a role. Renewed USD strength and higher global yields have weighed on the broader EM complex, including MXN, while CAD has strengthened on crosses alongside the dollar in line with its usual beta. Given the tactical scope for USD strength to extend further, we remain on the sidelines in CAD/MXN for now, even as we continue to regard MXN as better positioned than CAD on relative North American trade relations. Potential restrictions on US diesel exports introduce an additional near-term risk for MXN given Mexico’s exposure to US diesel supply (see Outlook section for further detail). The Canadian rates setup nonetheless continues to argue for CAD downside: OIS markets currently price ~55bps of cumulative BoC tightening across the next three meetings and ~105bps by mid-2027, even as our Canada economists expect the Bank to remain on hold over the next several meetings in their base case. OIS markets are also pricing more BoC tightening than Fed tightening over the coming year, which looks inconsistent with the relative US and Canadian macro backdrops (Figure 5OIS markets are also pricing more BoC tightening than Fed tightening over the coming year, which loks inconsistent with the relative US and Canadian macro backdrops). We therefore prefer to express the bearish-CAD view via long USD/CAD rather than re-entering on crosses.

Figure 5: OIS markets are also pricing more BoC tightening than Fed tightening over the coming year, which looks inconsistent with the relative US and Canadian macro backdrops

We scale up DM carry exposure by re-entering long NOK/SEK while maintaining our existing short-CHF and longGBP baskets, with this week’s central bank decisions reinforcing SEK and CHF as preferred funders. On net, this week’s Norges Bank and Riksbank decisions support re-entering long NOK/SEK, a position we have expressed at various points this year. The Norges Bank delivered a 25bp hike, retained an explicit willingness to tighten further, and signaled that rates will remain elevated for longer, preserving NOK’s historically-wide yield advantage over lower-yielding G10 currencies (Figure 6NOK’s yield advantage relative to lower G10 yielders is at two-decade highs, and it has notably risen above the dolar as wel. ). Elevated energy prices provide additional support, leaving NOK as the highest-ranked G10 currency in our cross-sectional systematic TEAM model (see FX Models section). The Riksbank also signaled that rate increases are expected to begin this year, but its projected path continues to undershoot market pricing and SEK remains a low-yielder in the global context. We therefore remain comfortable with SEK shorts, including against JPY, where recent rate checks and USD/JPY’s renewed approach towards 160 have increased the near-term prospect of yen-supportive policy action. JPY crosses have also recently underperformed relative to the new post-pandemic highs in the US equity-bond correlation (Figure 7JPY croses have recently underperformed relative to the new post-pandemic highs in the US equity-bond corelation, which partly informs our continued short SEK/JPY bias), which has coincided with an acceleration in the GPIF repatriation narrative and partly informs our continued short SEK/JPY bias. The SNB decision similarly encouraged CHF shorts by signaling little urgency to tighten and comfort with the franc’s depreciation. More broadly, CHF should remain under pressure in a higher-growth, higher-yield global backdrop, particularly as near-term policy risks around JPY become increasingly asymmetric. Elsewhere, our longGBP basket has underwhelmed despite sterling’s relatively favorable growth and carry characteristics within G10, likely reflecting its heightened sensitivity to higher global yields as UK fiscal scrutiny intensifies. We nevertheless maintain the position, as improving activity, attractive carry, and firmer systematic signals continue to argue for GBP outperformance against lower-yielders such as SEK and CHF, while diesel pressures appear contained (see Outlook section).

Figure 6: NOK’s yield advantage relative to lower G10 yielders is at two-decade highs, and it has notably risen above the dollar as well.

Figure 7: JPY crosses have recently underperformed relative to the new post-pandemic highs in the US equity-bond correlation, which partly informs our continued short SEK/JPY bias

We stay long AUD into next week’s RBA decision which should deliver another hike. AUD continues to benefit from relatively high carry, resilient global growth and supportive terms of trade. Our Australia economists expect the RBA to validate market pricing with a fourth hike next week, as senior officials have consistently emphasized the risk that persistent supply shocks raise inflation at any given level of unemployment and could feed into inflation expectations. However, they also note that this increasingly looks like riskmanagement tightening rather than a response to resilient domestic activity; the unemployment rate rose to 4.6% in August (already reaching the level projected by the RBA for June 2027), while Australian yields have materially outperformed US yields as markets begin to recognize the domestic constraints on further tightening. A subsequent November hike would likely require a meaningful upside surprise in third-quarter core inflation, and our local strategists expect the cash rate ultimately to realize below current forwards. Against this more two-sided backdrop, we maintain only modest AUD length (via short-CHF basket) and refrain from adding ahead of the RBA decision and subsequent CPI release.

Trades

• Buy NOK/SEK in cash, re-expanding previous exposure

We have been holding either long NOK/SEK outright or different combinations of NOK longs and SEK shorts since the pair was at 0.92 back in February; we continue to see merit at these levels and re-expand exposure after the Scandi central banks solidified the historically wide yield gap

(Figure 6NOK’s yield advantage relative to lower G10 yielders is at two-decade highs, and it has notably risen above the dolar as wel. ). Energy prices remain high and supportive, which alongside its carry keep NOK the best-ranked G10 currency in our cross-sectional TEAM model (see Models section).

Norges Bank and Riksbank reinforced the relative rates story. NOK struggled to benefit so much from the hike, as signalling was not quite as hawkish as rates markets expected and the terminal pricing came down slightly. However, we note that (1) our economists expect another hike in 1Q, taking the policy rate to 4.75%, and (2) the higher-for-longer message with continued risk of another hike is enough to support NOK going forward, in our view. It reinforces its yield advantage within G10 and the fact that this is not being eroded.

The Riksbank suggested multiple hikes ahead which, whilst less than markets had priced, still pushed a higher terminal and supported SEK on the kneejerk. But we do not think the expected hikes change the big picture as it still remains a low-yielder in the global context and we remain comfortable holding shorts as the level of US yields implies SEK should be even weaker (Figure 10EUR/SEK should be even higher based on the level of US yields). Forward guidance implies multiple hikes upcoming, and there too, our economists added another two hikes for 1H27, taking the policy rate to 2.5%. The key statement on this note was “If the outlook for inflation and economic activity remains unchanged, it is expected that the increases to the policy rate will begin this year”.

NOK/SEK has been tracking energy prices closely the past few months and looks fair to them even if it looks rich when adjusting also for forward rate differentials (given these have narrowed). Valuation overshoots are reasonable in our view given (1) NOK has previously traded rich when it was a high yielder and cheap when it was a low yielder (Figure 8Valuations are not a problem in our view: NOK has previously sen large mispricings when it was very low or very high-yielding), and (2) valuation mispricings across G10 are consistent with carry (see Figure 7 here). If energy prices fall significantly, this would hurt the trade; however, carry provides some buffer to the downside, with NOK now less sensitive to energy price declines than back when it was a low yielder (Figure 9 Now that it yields above the dolar, NOK is les sensitive to energy price declines than back when it was a low yielder). We thus keep the stop-loss wide to be able to ride through it (this would likely allow Brent to decline to ~$80).

• Buy NOK/SEK in cash. Spot ref. 1.0419. Stop loss 1.0050.

Figure 8: Valuations are not a problem in our view: NOK has previously seen large mispricings when it was very low or very high-

Figure 9: Now that it yields above the dollar, NOK is less sensitive to energy price declines than back when it was a low yielder

Figure 10: EUR/SEK should be even higher based on the level of US

We maintain our GBP long vs lower yielders CHF and SEK, informed by the continued narrative of attractive carry and resilient growth which can keep it supported in the higher-yield environment.

Across G10, sterling retains its position as strong on both carry and growth relative to European funders, in particular SEK (Figure 11GBP longs continue to lok god on cary and growth in G10), with a macro backdrop that is supportive. The mixed PMI (with a beat on manufacturing but miss on services) comes on what is otherwise data that is still beating expectations (see JPEASIUK Index). Our cross-sectional TEAM model is now thus long GBP, with the score improving in recent weeks. The fiscal story continues to take a backseat for now, allowing GBP to benefit from its relative strength in these areas; the Chancellor has shown a preference to not reveal any details until the budget, and so at the the Labour Party conference beginning this weekend, we do not expect much detail to be revealed.

Importantly, GBP also does not appear to demonstrate that it is being heavily positioned in. Our positioning monitors show that the market is not yet accumulating a long position in GBP (JPM FX Positioning Monitor, Locke); it is thus also lagging the other G10 high yielders in positioning.

• Long GBP vs SEK and CHF 50:50 basket in cash. Spot refs 13.0982/1.1008. Stop loss -2.5%. Marked at

Figure 11: GBP longs continue to look good on carry and growth in

Our CHF basket initially struggled to start the week, which we attributed to lower ECB yields, some risk-off price action, and perhaps position squaring ahead of the SNB. However, the dovish SNB delivery relative to expectations helped the trade recover. We maintain the trade as the macro backdrop of strong global and regional growth continues to screen supportive, whilst we remain mindful of short-CHF positioning.

The SNB encouraged CHF bears, acknowledging only a slight increase in inflationary pressures and no intention to hike for now given terminal inflation forecasts in the lower half of the target range, and despite rates markets that were pricing two over the next year already. The key line to us was that “medium-term inflationary pressure has increased *only slightly*”, which is slightly more hawkish language than the “virtually unchanged” pressures previously, but this is only a minor shift against the backdrop of high energy prices, a weaker currency and rates market pricing.The intervention language is dialled back to pre-March levels (still signalling willingness to intervene but not “increased” willingness), but this is likely an acknowledgement that the currency itself is weaker and they are thus less in alert, rather than a shift in stance on the currency that would suggest they are uncomfortable with weakness. The weaker franc is otherwise only mentioned in the context of the inflation and growth forecasts: the weaker franc and higher energy prices led to an increase in headline inflation forecasts, but these remain low, peaking at 1.2%oya near-term, but between 0.7%-0.9% from 2027 until the end of the horizon (which notably is conditional of policy rates at 0%). There is thus little need for the SNB to signal hikes for now with what they have in hand. The other notable mention of the franc is in the context of “monetary policy and the recent depreciation of the franc having a supportive effect on growth”, suggesting comfort with this depreciation rather than alarm. The press conference also expressed comfort with the inflation outlook and currency depreciation.

• Hold short CHF vs AUD, NOK, USD, HUF cash basket. Spot refs. 0.5661/11.6341/ 0.8030 / 381.1770. Trail-
• Hold long-USD cash basket vs SEK & CAD; tighten stop

We viewed the risk-reward of holding long-dollars favorably into this week: a hawkish Fed repricing some of the curve, firm recent data, valuation support and second-half-September seasonality. Those were all in play this week, amplified by a renewed push in Brent, concerns over the RoW impact from a diesel ban, and finally - and probably most importantly - exceptionally firm US PMIs that started to show more of a chasm between US and RoW growth (Figure 12US manufacturing PM

I indicators are almost al at YTD highs, which prompted USD buying on the back of higher yields , Figure 13There is more of a gap now betwen US and G10 in the flash PM

Having just hiked, the question becomes whether and to what extent more US yield support can be found; US has narrowed the gap vs G10 in the front-end, but October FOMC remains under-priced, and the risk (as we discussed in the Outlook last week) is that organic, cyclical US strength forces the market to contemplate a more serious hiking cycle. That will be tested next week, where early consensus looks for 100k/4.1%. While ADP might be a touch softer, the employment signals from PMIs and claims still strong (continuing making new multi-year lows) provides reason for optimism that the USD can benefit through and after payrolls into CPI. We continue to like running USD length vs low-yielders which stand to lose out the most on more rates repricing, while higher yielders continue to derive insulation from yield gaps. The biggest risk to the trade remains a shift lower in energy prices that sponsors mid-yielder relief.

• Stay long USD vs 50:50 basket of SEK & CAD in cash. Spot refs 9.5525 / 1.3837. Tighten trailing stop to

Figure 12: US manufacturing PMI indicators are almost all at YTD highs, which prompted USD buying on the back of higher yields

Is).

Figure 13: There is more of a gap now between US and G10 in the

Figure 14: US strength belies a forward curve that remains below G10 average further out the money market curve

Our tactical short SEK/JPY position, initiated on 21 August, outperformed short USD/JPY amid persistent upward pressure from rising US yields — validating our strategic preference to express JPY strength through funder RV rather than the dollar. Following the September BoJ meeting, which failed to provide meaningful support for JPY, Nikkei reported that a rate check was subsequently conducted. USD/JPY briefly declined approximately one yen before retracing to pre-rate-check levels last Friday, driven by a broad USD rally this week. Should USD/JPY continue its advance toward the 160 handle — a level widely perceived as a key policy alarm threshold — authorities may be compelled to intervene or implement additional policy measures.

Indeed, that’s what late-week news delivered, with a slew of reports indicating US and Japanese policy officials continue to cite concern over yen valuations. This is one of the prime reasons to hold the trade, including on the backup towards 160 in USD/JPY, as we perceive significant asymmetry in cross-JPY outcomes given a) the market’s tendency to selfpolice around the 160 level, and b) ongoing policymaker discomfort with yen depreciation. The latter and the associated clude the week, and validates our perception that the risk/reward calculus is positive. USD/JPY positioning has shifted markedly over the last six weeks (Figure 15The market has built up a solid USD/JPY short, but policymaker sensitivity improves the risk/reward of staying long JPY), but policymaker decisions can still deliver positive pnl.

Beyond this trade, we also hold a JPY barbell structure in our Derivatives portfolio for any potential intervention (note, Buy 3M 2% OTMS CHF/JPY put (1x notional) vs. Sell 3M 2% OTMS CHF/JPY Call (2x notional) vs. Buy 3M 2% OTMS USD/JPY call (1.3x notional) for 0.3 bps (spot refs. 188.8769, 154.3880).) On the weak JPY side, we have a long USD/JPY call (1.2x notional) vs. Short CHF/JPY call (1x notional), which makes money when yen weakens.

• Sell SEK/JPY in cash. Spot ref. 16.7903. Take-prof-

Figure 15: The market has built up a solid USD/JPY short, but policymaker sensitivity improves the risk/reward of staying long JPY

We were stopped out at a profit this week on our shortCAD/MXN recommendation, and turn tactically neutral. We’ve held CAD/MXN as a strategic position since September 2025, capturing a strong carry backdrop and relative trade impacts. As we’ve known for some time, the trade is particularly exposed to strong-dollar deleveraging environments, which was delivered this week on the back of strong US data and the continuing rout in global fixed income. There was a Latam-specific component as well, with concerns about a potential US diesel export ban punitively squeezing Mexico and other regional peers. As such, it was not surprising to see the snap higher in USD/MXN, and the outsized topside demand on the back of that as MXN length more generally was unwound (Figure 16USD/M

XN saw the strongest deleveraging and hedging flows this wek). CAD/MXN fortunately blunted some of that impact by virtue of the run-up in USD/CAD, but CAD still managed to outperform on crosses on the week, as it often does in strong-USD environments. As such, we move to the sidelines, having netted around 10% since inception but will remain open-minded about re-initiating if vol calms down and turns conducive to DM-funded EM carry trades once again.

• Stopped out of short CAD/MXN in cash at a profit.

Figure 16: USD/MXN saw the strongest deleveraging and hedging

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Average holding period (calendar days) *P&L in vol points. Source: J.P. Morgan

II. Trades closed over the past 12 months Macro Trade Recommendations portfolio Cash

Long

Short

Entry date

Entry level

Exit date

Exit level

12 Dec 25

11.6780

16 Jan 26

11.5121

1.6%

EUR, AUD

9 Jan 26

183.72 / 105.465

23 Jan 26

184.02 / 107.28

1.0%

14 Nov 25

10.9678

27 Feb 26

10.6824

2.5%

GBP, SEK

30 Jan 26

28.0832 / 2.3095

27 Feb 26

27.6446 / 2.2691

-1.7%

6 Feb 26

1.1812

2 Mar 26

1.1768

-0.9%

19 Sep 25

0.6592

3 Mar 26

0.7040

7.0%

14 Nov 25

13.0862

3 Mar 26

12.7700

3.9%

NOK, AUD

11 Sep 25

7.1296 / 0.9210

3 Mar 26

7.0597 / 0.9646

3.7%

NOK, CHF, SEK

USD, JPY

14 Nov 25

100.0000

3 Mar 26

103.5000

3.5%

19 Jan 26

1.7347

23 Mar 26

1.6549

5.0%

AUD, NOK

6 Feb 26

6.3173 / 0.9295

23 Mar 26

6.5597 / 0.9615

4.0%

SEK, GBP

27 Mar 26

6.4954 / 1.9323

8 Apr 26

6.5129 / 1.9066

0.9%

EUR, SEK,

1.1455 / 9.3841 /

1.1692 / 9.2365 /

13 Mar 26

8 Apr 26

-1.3%

GBP, NZD

1.3252 / 0.5816

1.3445 / 0.5839

23 Apr 26

12.4507

7 May 26

12.5497

0.9%

AUD, NOK

17 Apr 26

0.9855 / 6.8567

15 May 26

0.9854 / 6.7775

0.7%

CHF, JPY

17 Apr 26

12.0314 / 16.8837

9 Jun 26

11.9182 / 16.8762

1.0%

8 Apr 26

1.6571

9 Jun 26

1.6417

1.0%

CHF, JPY

12 Jun 26

11.9548 / 16.8310

29 Jun 26

12.2482 / 16.3221

-2.5%

SEK, CHF,

12.733 / 1.0713 /

12.9771 / 1.0876 /

19 Jun 26

21 Jul 26

1.9%

0.8634

0.85069

19 Jun 26

6.7150

29 Jul 26

6.7452

0.8%

5 Jun 26

10.8966

30 Jul 26

11.0056

1.0%

17 Apr 26

12.5695

24 Sep 26

12.4410

3.0%

Long

Short

Entry date

Entry level

Exit date

Exit level

14 Nov 24

164.6200

20 Jan 25

161.3276

1.6%

26 Nov 24

173.9440

20 Jan 25

171.3348

1.5%

26 Nov 24

2.7020

23 Jan 25

2.7831

-3.2%

06 Nov 24

1.0781

24 Jan 25

1.0475

3.2%

06 Nov 24

0.9418

24 Jan 25

0.9510

-1.5%

10 Jan 25

109.8450

24 Jan 25

108.7430

0.9%

26 Nov 24

11.5323

24 Jan 25

11.4595

0.6%

24 Jan 25

0.9049

02 Feb 25

0.9078

0.4%

USD, JPY

02 Feb 25

1.4744 / 105.174

04 Feb 25

1.4375 / 107.851

-2.5%

24 Jan 25

11.4614

14 Feb 25

11.2323

0.6%

10 Jan 25

13.7365

14 Feb 25

13.4858

0.8%

31 Jan 25

160.9700

14 Feb 25

159.5805

0.3%

02 Feb 25

0.9379

14 Feb 25

0.9441

-0.7%

EUR, GBP

02 Feb 25

1.0249 / 1.2240

14 Feb 25

1.0478 / 1.2581

-2.4%

31 Jan 25

87.5050

21 Feb 25

85.7220

0.9%

10 Jan 25

13.7365

21 Feb 25

13.4471

0.9%

24 Jan 25

11.4614

28 Feb 25

11.1502

0.7%

31 Jan 25

170.4860

05 Mar 25

168.0000

0.2%

NOK, AUD

07 Mar 25

10.8479 / 0.6299

25 Mar 25

10.5053 / 0.63

1.6%

05 Mar 25

10.2550

25 Mar 25

10.0506

0.9%

05 Mar 25

1.0758

28 Mar 25

1.0824

0.2%

07 Mar 25

10.9264

28 Mar 25

10.8262

0.5%

DXY components

05 Mar 25

104.5600

28 Mar 25

104.0400

0.4%

07 Mar 25

11.7579

03 Apr 25

11.3964

1.3%

28 Mar 25

1.7201

03 Apr 25

1.7426

-1.3%

07 Mar 25

167.7000

10 Apr 25

173.5695

-3.5%

04 Apr 25

0.8477

25 Apr 25

0.8566

1.0%

NZD, USD

28 Feb 25

4.3590 / 150.650

25 Apr 25

85.716 / 143.75

1.3%

02 May 25

0.9261

09 May 25

0.9383

1.4%

28 Mar 25

162.4800

09 May 25

163.5800

-0.9%

02 May 25

174.9530

20 May 25

174.1600

0.5%

02 May 25

1.0825

30 May 25

1.0776

-0.4%

30 May 25

7.4290

13 Jun 25

7.3023

1.8%

NOK, SEK

23 Apr 25

11.8130 / 10.9110

20 Jun 25

11.3964 / 10.8262

1.0%

AUD, NZD

02 May 25

0.6444 / 0.6017

28 Jul 25

0.6559 / 0.601

0.4%

02 May 25

144.5500

30 Jul 25

149.6093

-4.5%

27 Jun 25

7.3956

15 Aug 25

7.3739

0.5%

15 Aug 25

5.6642

21 Aug 25

5.5831

-1.4%

01 Aug 25

148.1500

05 Sep 25

146.9500

0.5%

26 Sep 25

86.2380

09 Oct 25

88.3940

-2.6%

NOK, SEK

23 Apr 25

13.8000 / 12.7560

14 Oct 25

13.3959 / 12.5543

0.8%

26 Sep 25

0.9332

24 Oct 25

0.9247

1.3%

11 Sep 25

13.3970

27 Oct 25

13.1771

2.3%

NOK, SEK

20 Jun 25

11.6523 / 11.1472

04 Nov 25

11.7328 / 10.9655

1.0%

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Disclosures

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