Thursday, August 2, 2018

A central debate in markets continues to be whether the Dollar will rise or fall. This debate tends to brush over the fact that there are two versions of the Dollar. One versus EM that is close to record highs, due to EM ructions and trade tensions. Another versus the G10, which looks weaker despite supportive interest differentials. We trace this decoupling to rising oil prices, which are a historical negative for USD, rather than the widely discussed twin deficits or diminished reserve currency status. We anticipate more Dollar strength versus EM and a catch-up vis-à-vis the G10.

IIF Authors

Robin Brooks

Robin
Brooks
Managing Director and Chief Economist
@RobinBrooksIIF
rbrooks@iif.com

Jonathan Fortun

Jonathan
Fortun
Associate Economist
@econchart
jfortun@iif.com

Gregory Basile

Gregory
Basile
Senior Research Analyst
@GregBasileIIF
gbasile@iif.com

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