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TD Bank's global head of FX and emerging market strategy, Mark McCormick, joins Catalysts to discuss the performance of the US dollar (DX=F, DX-Y.NYB) as trade tensions escalate with China.
McCormick highlights "an elevated level of trade uncertainty," observing that investors have been buying the long dollar trade over the past few months to re-engage in the momentum trade.
"There's a lot of confusion about the impacts of trade uncertainty," he explains, questioning whether this will reinforce US growth, negatively impact US equities, or prove to be inflationary. Despite the uncertainty, McCormick believes "part of the clarity comes through fundamentals." Behind the market noise, he sees a macro story indicating that the US dollar's fundamentals are so strong that it would inevitably rally in the first quarter of 2025.
Calling the dollar "the world's safe haven," McCormick notes that it continues to outperform regardless of market (^DJI, ^IXIC, ^GSPC) volatility.
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This post was written by Angel Smith