While net long positions on the U.S. dollar versus its Canadian counterpart are below the peak of last October, the possible onset of significant tariffs on Canadian imports into the U.S. has taken a toll on the Canadian dollar. Should higher tariffs on Canada announced by the United States take ... READ MORE >
U.S. dollar
Market minute: Clash of the titans to cause further currency manipulation
Trade War 2.0 between China and the United States will stimulate further currency manipulation out of China to partially offset the 10% tariffs on Chinese goods imposed by the new administration. Now, with China imposing $14 billion on trade taxes on goods, it is likely that a series of tit-for-tat ... READ MORE >
Morning market minute: Tariffs and the rising dollar
Investor expectations of a new round of tariffs have caused the U.S. dollar to mildly appreciate in recent months. Now, with steep tariffs on goods from Canada, Mexico and China set to begin Tuesday, one should expect the greenback to go even higher against major trading currencies. Such a move will ... READ MORE >
Morning market minute: Managing currency risk in an era of regime change
We expect the international investment community to continue purchasing U.S. financial assets, and in particular to continue financing the U.S. budget and trade deficits. Not only are the yields on U.S. government bonds and securities higher than those in most developed economies, but there is the ... READ MORE >
Morning market minute: Managing the dollar’s risk, volatility and tariffs
With the Trump administration’s changes in trade and financial policies looming, the U.S. dollar is sensitive to headline risks and will be subject to volatility in the coming months. And that volatility injects an uncertainty tax that distorts the efficient functioning of financial markets and the ... READ MORE >
Morning market minute: The contradictions at the heart of U.S. economic policy
Abraham Lincoln once said that a house divided against itself cannot stand. That was true in 1858 and it’s true today when it comes to economic policy. The Trump administration’s strategic economic objective is to rebalance the global economy. That is, the Trump administration intends to reverse the ... READ MORE >
Morning market minute: India’s rising capital buffer and the end of its currency peg
As India has gained prominence in the global economy, its central bank, the Reserve Bank of India, has wisely increased the level of foreign exchange holdings. These reserves are necessary to maintain payments for imports should there be a global economic financial crisis or a sudden devaluation of the ... READ MORE >
Morning market minute: The end of the Indian rupee’s effective dollar peg
A currency is a two-sided instrument. In the case of the Indian rupee-U.S. dollar exchange rate, the demand for the rupee has been overwhelmed by the demand for the dollar and a loss of competitiveness over the two years that the Reserve Bank of India has maintained a de-facto peg to the dollar. Now, ... READ MORE >
Identifying countries at risk as the U.S. dollar surges
Over the past year the real trade-weighted dollar index has appreciated 6.88% because of a combination of interest rate differentials, strong growth and expectations of reduced regulation, lower taxes and increased government spending. With these trends showing no sign of easing, the greenback will ... READ MORE >
Servicing external debt in a strong-dollar environment
Strong U.S. economic growth, the advent of industrial policy and the arrival of expansionary fiscal policy next year have all caused the greenback to soar in value recently, with more increases on the way. But the dollar’s strength is coming at price for emerging markets, which must pay more to service ... READ MORE >