Daily Briefing – August 19, 2020

Senior editor, Ash Bennington, joins managing editor, Roger Hirst, to take a deep dive into the apex predator of currency markets: the U.S. dollar. Roger argues that the size and speed of the dollar’s fall is driven more by euro strength, flowing out from the ECB’s move toward debt mutualization, than it is by dollar weakness. He explains how certain EM currencies are still weakening as compared to the dollar and how the ECB and the BOJ may find it difficult to hit their inflation targets should their currencies continue to strengthen. Roger also expounds on how bond yield convergence between the U.S. and Europe is contributing to euro strength. In light of these potential structural challenges and the supply and demand bottlenecks due to COVID-19, Ash and Roger then explore how to play the trade and the ongoing bifurcation of financial markets and the economy. In the intro, Peter Cooper looks at Apple’s $2 trillion valuation and Target’s Q2 earnings report.