When Jeff Gundlach talks about the US dollar, pay attention.
Back in June 2014, Gundlach said the US dollar was likely to break out to the upside, or rise in value.
This call proved prescient, coming just before one of the biggest and most consequential dollar breakouts in decades.
In a webcast on Thursday, the DoubleLine Funds CEO said it’s starting to look like this trend could reverse.
“I’ve been agnostic on the dollar,” Gundlach said, “but now it’s kind of looking like it may break to the downside.”
Gundlach added that he doesn’t see evidence that an interest rate increase from the Federal Reserve will boost the dollar higher.
Conventional wisdom would say that the dollar should rise in value if interest rates rise because higher rates suggest higher returns as well as reflect better prospects for the US economy.
In 2014, the Fed ended its quantitative easing program and began the march towards raising interest rates. In turn the dollar rallied.
Additionally, concerns over economic growth in Europe and China — contrasted with relative strength out of the US economy — aided this rally which in many ways has been the most influential economic trend of the last decade.
And now it could be over.
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