At Any Rate Global FX: Take-aways from FOMC and other DM central banks
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Sep 19, 2025 Patrick Locke, a Senior FX strategist at JPMorgan, and James Nelligan, also a Senior FX strategist from London, discuss the aftermath of DM central bank Superweek. Locke dives into the Fed's dovish tone and its effects on currency trends, exploring pro-cyclical FX and opportunities in emerging markets. Nelligan analyzes the hawkish stance of Norges Bank and the fiscal challenges facing the UK, shedding light on how these factors influence European currency fair value and upcoming shifts in the SNB and Riksbank.
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Dovish Fed Keeps Dollar Under Pressure
- The Fed's communication was the most dovish since 2021 despite mixed technical signals from dots and descents.
- That dovish tilt and an asymmetric reaction function keep downside pressure on the dollar over the medium term.
Apparent Hawkishness Masks Dovish Stance
- Market reaction looked hawkish because some Fed elements disappointed relative to expectations.
- Yet the overall policy stance still shifts dovish, favoring pro‑cyclical FX positioning.
Use Carry‑Efficient Dollar‑Bear Proxies
- Use carry-efficient FX proxies like CAD instead of selling the dollar outright.
- Favor pro‑cyclical, higher‑carry currencies such as AUD and NOK as growth remains benign.