Zaman: Dollar peak may be in; favor high yielders (with Yvonne Man, David Ingles)

4/10/2026 10:20:42 AM	medium term cautious down	21 days later	+0.10%	-0.05%
2/2/2026 5:53:19 AM	long term down	62 days later	+2.61%	-2.61%
11/27/2025 9:58:08 AM	medium term cautious down	20 days later	-1.04%	+0.52%

Asks if there is more upside to the dollar after the hawkish Fed tilt.

Yvonne Man

Majhabelen Zaman

We are cautious. Peak hawkishness is already in the price. What else can take the dollar higher? US exceptionalism hinges on positive wealth effects from risk assets, but household savings are at their lowest.

The status around the US consumer is not looking as amazing, and that positive wealth effect from equities is probably giving that extra boost to risk assets.

Asks if he should go incrementally long on the dollar from here.

David Ingles

Majhabelen Zaman

We still have a leaning towards a weaker dollar into year-end. If the Strait reopens and oil prices remain lower, energy importing FX that were sold off will come back. The euro will also probably raise one more time.

That will limit how much higher the dollar can go.

Asks about the yen and whether policymakers will intervene.

Yvonne Man

Majhabelen Zaman

They were probably on the sidelines to see how the Fed plays out. Intervention didn't help in April/May unless it's coordinated. To get a stronger yen, we need a super hawkish BOJ, which we didn't get—slow normalization is the message.

We also need reduced volatility around Japan's fiscal story and declining energy prices. Everything needs to come together.

Asks if Japan will get its stars aligned to pull the exchange rate down.

David Ingles

Majhabelen Zaman

We think there will be one more rate hike by the BOJ in Q4. The stars are getting aligned—inflation is back, real wages are in positive territory. Once we are through the fiscal story, the yen will strengthen into next year.

The direction is there, but we have this volatility to face right now.

Asks how to fade dollar strength across G10.

Yvonne Man

Majhabelen Zaman

High yielders will stand out. The RBA was ahead of the curve, raised rates three times, and that carry advantage will support the Aussie when risk assets perform again. Among energy importers, the euro will likely outperform.

The Aussie also had an extra advantage as a net energy exporter, though there may be some clawback there.

Asks if the bullish Aussie trade will continue or change.

David Ingles

Majhabelen Zaman

Three things drive the Aussie: carry, global growth story (which will be supportive if the war ends), and its net energy exporter status. The other elements will continue to support it.

Asks about the pound and whether the BOE can afford to hold.

Yvonne Man

Majhabelen Zaman

CPI came short of expectations, so all the more reason to hold. We don't think the BOE will hike at all—probably an extended hold. Oil prices coming off is a positive. The by-election is the most meaningful market mover this week for the fiscal side and gilts.

Even if the BOE leans marginally more hawkish, it won't change expectations much.

Asks how less forward guidance affects FX research.

David Ingles

Majhabelen Zaman

Less forward guidance means we ought to look at the data squarely. What the data says is what the Fed will also look at. The trimmed PCE is growing at a marginally slower level, very close to the 2% target.

Different measures of inflation and what they indicate will play into our forecast.

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