Where the US dollar goes, everything follows

Ain’t this the truth from Nordea:

The past week has seen the S&P500 future, Nasdaq and Brent oil prices primarily ranging sideways amidst choppy price-action. Aside from higher yields worrying investors – which has been the case on and off for the past few months, investors now also have to think about the direction of the dollar…

While we remain strategic reflationistas and inflationistas (for now), we fully understand these choppier markets. For instance, should the dollar break free (higher) in a more significant way, it would likely spell trouble for broader risk appetite. For instance as it would weigh on global liquidity (in USD).

Chart 1. A stronger dollar weights on global liquidity (in USD)

The full text of this article is available to MacroBusiness subscribers

$1 for your first month, then:

$24.99 / month

$249 / year

Cancel at any time through our billing provider, Stripe

Share

About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.