FX moves: Geopolitics versus monetary policy

In this PERSPECTIVES Special, we explore how the Hormuz-specific conflict with Iran has become a defining macro shock, disrupting global energy flows, lifting inflation risks, and reshaping cross asset and regional market dynamics, with the US relatively insulated but still exposed to higher prices and tighter financial conditions.

China’s 2026 National People’s Congress and the launch of the 15th Five Year Plan mark a clear shift toward stability led, supply side policy management rather than broad cyclical stimulus. PERSPECTIVES Special examines how Beijing is prioritising risk control, technological upgrading and productivity gains, while keeping demand support targeted and measured. We assess the implications for growth, inflation and policy transmission, and outline where investors should expect greater dispersion across asset classes and sectors – highlighting the opportunities most closely aligned with China’s evolving strategic priorities.

We assess how a Hormuz-related energy shock transmits through APAC macro fundamentals, sector earnings and equity market positioning, and why it may act as a structural catalyst for Asia’s long term energy security transition rather than just a short-term market event.

We assess the key features of the EU-Mercosur agreement, its implications for investment and trade flows, and the equity market sectors most likely to benefit on both sides.

Published following our quarterly CIO Day, this outlook provides a summary update of our economic and asset class views for the next 12 months.

The conflict has escalated with direct US-Israel strikes on Iran and regional retaliation. Risks to energy supply have increased significantly, as energy transportation through the Strait of Hormuz has been disrupted. Read more.