UBS CIO have introduced their FX targets for June 2024. Their forecasts for the new quarter reflect their view that the USD will weaken even further by then. First, the economic outlook for currencies of exporting nations is looking more favourable than the US'. Second, their valuation models still suggest the USD is strongly overvalued. Given economic conditions, they continue to expect the valuation gap between the USD and its G10 peers to compress further over the coming quarters. Notably, they forecast EURUSD at 1.18 in 12 months and GBPUSD at 1.38. They are most preferred to the JPY and the AUD for their valuations, balance-of-payment and monetary policy dynamics with a 12 month forecast of USDJPY 120 and AUDUSD 0.76.
- UBS Strategy
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