From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
King Dollar is reasserting its reign at the expense of major global currencies and risk assets.
What started as a potential failed breakout last month is proving no more than a hard retest, as the US Dollar Index $DXY broke to fresh 20-year highs yesterday.
Even the most resilient currencies, such as the Canadian and Australian dollars and the Mexican peso, are losing ground against a surging USD.
As we’ve pointed out, this is not an ideal scenario for risk assets – particularly stocks.
Yesterday’s price action was a great example – dollar up, stocks down.
This is not a coincidence.
Let’s zoom out and analyze the dollar’s recent strength and then discuss what it means for these other asset classes.