It’s no wonder the Dollar keeps taking a beating: Traders at banks are being told to keep hammering away at the poor greenback.
An internal RBS memo tells traders in no uncertain terms to:
Stay with the established themes of 1) USD weakness and 2) carry/trends trump valuations. One place to oppose this is GBP.
In part, their bet is to be on the same side as emerging market governemtns, such as those in Latin America:
Expectations of a relatively strong economic recovery and USD weakness should increase pressure on the region’s Governments to intervene to stem FX appreciation.
These internal messages echo what banks are saying outwardly. Erik Davidson, senior managing director at Wells Fargo’s Private Bank, tells Forbes that investing with US Treasyrues is “a strategy for losing money safely.” Between the declining dollar and falling Treasury yields, the idea is no longer to invest in “what’s good” but rather, “what’s less bad.”