In This Article:
Francesco Pesole, ING FX strategist, joins Catalysts to discuss how markets are reacting to Treasury Secretary Scott Bessent's recent comments and break down the strong US dollar (DX=F) strategy.
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
Francesco, I want to go to you on this. And I can't wait to get your take on what the treasury secretary just said about the price of the dollar. It's not what you see on the Bloomberg screen. What did you take that for?
It's not the first time, really, that uh Beason talks about the importance of retaining the uh so strong dollar policy. We must remember that the original plans by the Treasury in theory was that the the first reaction of the dollar to tariff announcement would be a strong dollar that should have helped insulate US consumers from higher prices from tariffs. And obviously the fact that we saw this sort of loss of confidence in the dollar and the dollar sell off in actually right after liberation day is not something that that probably um Beason was happy with and I believe that there is an ongoing attempt to reestablish at least some stability in the dollar uh for the period that the first inflationary hit will occur in in the US. And then only look at sort of weaker dollar for exports, sort of advantages at a later stage.
Francesco, obviously you are an expert in global currencies, but I want to get your geopolitical hat on this. Beson saying that the US wants to help China pivot away from an export first economy. How do you read that? Do you think that the US has overplayed its hand when it comes to China?
Well, I'm not sure that there is much interest uh on in Beijing to sort of sort of allow the US to sort of drive a transformation domestically in terms of sort of the the whole business model. Um I mean, when we look at what China has been trying to do is that they are also trying to slowly migrate away from the export only model. Uh so I I'm not sure they would be able to do it or willing to do it at the conditions that the US may want to set there. Uh but I I think what what what's really important is that um China had already started sort of transitioning away, especially when it comes to cheap manufacturing and they want to specialize more on new technologies and on on on AI. They're trying to push in that direction as well as um electric vehicles, which is another big factor. I think this is already happening and will be happening regardless of of the role of the US.
