Global growth momentum as evidenced in growth forecasts and datasurprises has softened further with risks concentrated in Asia…

 …at the same time, conditions (Fed speak, US data, cleaner investorpositions) are becoming more conducive for higher US yields. Though stillevolving, this combination has increased risks for USD strength and againsthigh beta FX.

Macro visibility is poor which combined with shallower liquidity is keepingconvictions and FX investor risk appetite low.

Keep tactical exposure light. In G10, we are long USD vs. EUR (on yielddivergence) as well as CAD and NZD (as a growth hedge). In EM ourstrategists are neutral overall across regions with focus on RV instead.

FX forecast revisions this month are primarily for a stronger dollar but inmodest magnitudes.

G10: EUR/USD forecasts are lowered on clearer prospects for monetary policydivergence by 1c across the horizon to now target 1.15 by mid-2022 (1.16).USD/CAD 1y targets are raised to 1.22 from 1.20. USD/JPY (112) andAUD/USD are unrevised (0.74).