Everyone’s talking about how the dollar’s been getting smacked around, and yes it’s within a hair of its lows for the year. Is this really a sign, as some would say, that the market is predicting massive inflation or even a dollar collapse? Please.
Look around. Trade is picking up, and the world is hungry for oil, gold, and more risk. To buy those things, you need to take your dollars to the currency exchange shop, and get them converted into other currencies. It’s why the Canadian dollar is doing so well, sitting nearly at its highs of the year.
When there’s a major negative economic shock, and you see the dollar take a massive beating then you should be scared. But until then, dollar weakening at the same time other markets are rallying merely looks like a confirmation of a trend (seen also in yield spreads and the VIX) that fear continues to dissipate.
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