The US dollar is rallying on strong labor data and potential Fed hike expectations, causing an unwind of 'debasement' trades in gold, bitcoin, and the Swiss franc.
Key Takeaways
- 1.The US dollar is gaining strength on the back of upside surprises in labor market data, specifically JOLTS, which is prompting markets to reconsider potential Fed hikes.
- 2.The popular 'dollar debasement trade'—involving gold, bitcoin, and the Swiss franc—is under pressure and being unwound as a more hawkish Fed outlook emerges.
- 3.ECB hawkishness, with 50bp of hikes priced in through September, is providing a floor for the Euro despite rising US yields.
Table of Contents
- USD: De-basement trade under pressure
- EUR: Hawkish ECB to protect the euro's downside
- CHF: Coming under some pressure?
- CEE: Hawks and doves take turns
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Authors
Chris TurnerFrantisek TaborskyFrancesco Pesole
Securities
DXYUSDCHFEURUSDBTCXAUEURCZK
Themes
Central Bank Policy DivergenceDollar Debasement Trade UnwindingEnergy Geopolitics and FX
Regions
North AmericaEuropeAsia PacificUnited StatesPolandCzech Republic