Global FX: US payrolls/midterms, EM elections, DM central banks

Global FX strategy remains anchored by a constructive dollar outlook, a focus on global carry trades, and a strategic rotation toward the euro as a funding currency. While US midterm elections present potential volatility, the dollar’s trajectory remains tied to fiscal policy and equity performance rather than political shifts alone. In emerging markets, Brazil’s recent election results have not yet triggered a broad sell-off as investors struggle to find alternative high-yield opportunities, while Israel’s political deadlock complicates its FX outlook. Meanwhile, the Bank of England faces hawkish risks as labor market data contradicts previous slack assumptions, and the UK budget’s pessimistic growth forecasts create a cushion for future borrowing. Collectively, these developments reinforce the relative attractiveness of the Australian dollar and Norwegian krone, while the New Zealand dollar faces headwinds from potential policy shifts and weak terms of trade.