Oh, dear! It seems like two big banking beasts are ringing the alarm bells about the US dollar. 🛑
In a survey conducted between April 30th and May 6th, more than half (yes, that’s 55%) of the foreign exchange experts chimed in with a big “Uh-oh!” when asked whether the US dollar could still be a reliable shield in times of economic chaos. Spoiler alert: They’re not so sure. 🤔
Wells Fargo’s very own macro strategist, Erik Nelson, is practically rubbing his hands together with glee (or is it worry?) as he predicts the dollar will tumble in the months ahead. Why? Well, the US economy seems to be showing signs of a sleepy slowdown. 😴
“We’re more bearish on the dollar in the second half of the year. More realization of weak US hard data, the Fed starting to actually cut rates as markets are pricing, some of the rotation out of US assets and concerns around Fed independence will likely come back into view.”
Meanwhile, over at Standard Chartered, Steve Englander is clutching his pearls about the dollar’s status as a “safe haven.” According to Steve, America’s budget is in such a sorry state, even the most loyal investors are getting cold feet. 😱
“It’s like a betrayal of confidence from a friend. You can argue it didn’t matter, or that you didn’t mean it, but your friend still remembers it. That’s where the dollar currently is with respect to international confidence.”
“If you’d asked me this two months ago, I’d say what matters for the dollar in the first instance is the stimulus, and the funding – whether or not they’ve actually gotten revenues – would be secondary. Now it’s clear markets are much more concerned about the long-term fiscal path.”
For those with a taste for numbers, here’s the juicy detail: The US government has spent a jaw-dropping $1.31 trillion more than it’s made this year. And that’s just in the first few months! 😲 That’s a whopping $242 billion more than last year’s deficit. Talk about a fiscal fiesta! 🎉
And as if that wasn’t enough to give you a headache, the US dollar index (DXY) has been on a downward spiral, losing more than 7% since February. Maybe the dollar needs a vacation? 🌴💸
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2025-05-10 23:29