JPMorgan’s Bearish Dollar Stance Challenged by Iran Oil Shock

A sustained oil price shock as conflict between the US and Iran escalates and snarls tanker traffic across the Middle East is the biggest threat to JPMorgan Chase & Co’s view that the dollar will weaken this year, according to the bank’s foreign-exchange strategists.

JPMorgan has been bearish on the dollar — and positive on so-called high-beta currencies like the Australian dollar and Mexican peso, which are particularly sensitive to global risk sentiment — for months. The position was based on the assumption that “an unprecedented disruption” in commodity markets was improbable, strategists Meera Chandan, Octavia Popescu, and Patrick Locke wrote Monday, noting that this view has now failed.