Currency Quarterly Q3 2026 | Insight Investment

Global growth remains resilient, with our growth indicator at its strongest since 2022. Unless risk aversion rises materially, we expect the USD to remain range-bound. However, the USD outlook remains finely balanced; structural concerns around US fiscal policy and Fed independence point to weakness, but a hawkish Federal Reserve, higher yields and the risk of tighter financial conditions provide support.

Our Macro Discretionary exposure is limited, with a modest long JPY position funded through USD and CAD. Our Alt Risk Premia model is long USD through Quality, Momentum and Carry, and constructive on the undervalued JPY. Elsewhere, it favours shorts in NOK, SEK, GBP, CAD and EUR.

The alpha view

Given the uncertainty around the policy outlook our Macro Discretionary exposure is limited. We have a modest long JPY funded partly through the USD and partly through the CAD.

The Alt Risk Premia model also holds a long USD exposure driven by the Quality, Momentum, and Carry Factors.

The model is also constructive on the JPY due to cheap valuations.

Elsewhere, we favour shorts in NOK, SEK, GBP, CAD and EUR. The overall portfolio is shown in Figure 1.

Figure 1: Insight currency absolute return exposure

Source: Insight. Data as at 30 September 2026. Note: dark green dot shows aggregate position.

Longer-term valuation overview

For less agile longer-term investors whose investment decisions lean more heavily on valuation metrics, a few points can be made.

• The USD is moderately expensive.
• The CHF and EUR are moderately cheap, while JPY is very cheap.
• The AUD, CAD, NOK, SEK and NZD look close to fair value.
• The GBP is slightly expensive.

Figure 2: Local currency overvaluation (+) and undervaluation (-) versus USD

Source: Data as at 30 September 2026.