From Sherwood news (div. of Robinhood Financial, get it?), August 20:
The dollar has slumped against the yen, and is reaching a critical inflection point versus other major currencies as well.
The eagle’s wings have been clipped.
The US dollar is sinking like a stone, with the Bloomberg Dollar Spot Index down 1% over the past three sessions and more than 3% off its late June 2024 peak.
Of course, the biggest factor behind the ferocity of the USD decline in August was the unwind of the yen carry trade, which propelled the Japanese currency sharply higher.
Analysts at Bespoke Investment Group note that, through Monday, “2.0 percentage points of [the Bloomberg Spot Index’s] total drop has come from the yen, which has gained almost 10 percentage points against the dollar during its recent short squeeze.”
“All other currencies have accounted for only slightly more than 1% of the drop,” they add. “This USD decline is far less about broad dollar weakness than the yen story,”
Bespoke Investment Group
But scan across the foreign exchange universe, and we’re reaching the point where this could transform from “yen strength” to “broad dollar weakness” – or this nascent trend could peter out....
....MUCH MORE
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