Is the dollar’s stumble a sign of things to come?

Also Interesting

• Economic and Strategy Viewpoint
• What’s up in CEE?
• Unwind First, Hike Later

Investment Insights 

Is the U.S. dollar entering a new multiyear bear cycle, or is it just experiencing an episode of weakness in an already decade-long bull run? It’s a question at the top of investors’ minds given the dollar’s steady decline since the outbreak of COVID-19 earlier this year.

Dollar cycles typically last for many years. Shifts between bull and bear cycles tend to develop very slowly, and there are often false starts. While it is too early …

Key Takeaways

• Recent U.S. dollar weakness may be signalling the end of a nearly 10-year dollar bull cycle.
• Key drivers include lower U.S. Treasury real yields, a large fiscal deficit and potential deglobalisation.
• Investors can position for dollar weakness through unhedged global bond strategies.
• Other strategies with foreign currency exposure, such as emerging markets debt, may also benefit from a weaker dollar.