Fundamental Overview

The USD Boost

The USD got a boost yesterday from the strong US PMIs which lifted Treasury yields and put in question the rate cut in September with the probability falling to roughly 60%. I would argue that the details weren’t that bad on the inflation front but overall good for the growth side. The good part is that in either case the trend is unlikely to change as both drivers are supportive for more upside.

Continued Growth

The trend will likely change only when we start to get some recessionary US data…

How will this affect me?

The strengthening of the USD may have mixed effects on individuals. On one hand, a strong dollar can make imported goods cheaper, leading to potential savings for consumers. On the other hand, a strong dollar can also hurt US exporters by making their goods more expensive in foreign markets.

How will this affect the world?

The impact of the USD boost on the world can be significant. A stronger dollar can lead to increased financial market volatility, especially in emerging economies which have high levels of USD-denominated debt. It can also impact global trade balances and potentially lead to currency wars as countries try to devalue their own currencies to remain competitive.

Conclusion

In conclusion, the USD boost from the strong US PMIs has the potential to have wide-ranging effects both on individuals and on the global economy. It will be important to monitor how this trend develops in the coming months and to be prepared for any potential shifts in the financial markets.