22nd July, 2020
Although it caught a breather on Wednesday, the U.S. dollar's recent slide snowballed this week to 18-month lows against the euro, within sight of March lows on its wider DXY index and even 4-month lows vs. emerging market currency indices. Investors are wary of dollar exposure for a variety of reasons - the removal of global funding stress associated with initial pandemic shock, concerns about the U.S. government's relative ability to control the pandemic, the looming Presidential election in November, a possible "benefits cliff" at the end of July and the need for further Fed stimulus if that happened, and concerns about Chinese Treasury holdings during escalating political tensions between the two powers. One offshoot of a weakening dollar has been an additional boost for dollar-denominated commodities, precious metals in particular. Silver and Gold prices have surged again this week to near 7-year and 9-year highs respectively.
Chart by Ritvik Carvalho and commentary by Mike Dolan.
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