🦧 is usd the obvious trade now?

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year-to-date: $uup (invesco db us dollar index bullish fund) and euro / us dollar pair

🇺🇸 will usd continue to rally?

the jackson hole symposium is held this week, where fed chair jerome powell is expected to speak on Friday

• this is an annual event in which central bankers, finance ministers, academics, and leading market players gather to discuss global economic issues

• but obviously, we mostly care only about what fed chair jerome powell has to say in his speech on friday

  • many are anticipating that powell will still stay hawkish in his comments

  • although this chief economist at GS 0.00%↑ thinks there may be mentioning of slowing down the pace of rate hikes

yeah, inflation sucks, rates will rise, but how can i profit from it? UUP 0.00%↑ is a great, easy vehicle for any retail investor to benefit from the strengthening dollar

• the us dollar has been strengthening against pretty much almost all currencies

  • i.e. at the start of this year, one euro could buy around $1.13 but now only has the power to buy $0.99, hence the strengthening dollar

• this has many reasons, but here are the top three

  • us fed is raising rates faster than major central banks like the ecb

  • china’s showing signs of slowing economic growth, on a worse trajectory that the us’ (renminbi / usd pair is down 7% ytd)

• the dollar has always been the safe haven asset of all currencies, and russia-ukraine isn’t going away anytime soon, so investors look to move assets to “feel safer”

imo:

• the dollar rally isn’t over yet

  • fed will continue to aggressively raise rates – we’re nowhere close to the end of rate hikes

  • china will likely continue to show worse-than-expected economic trajectory, while the us will likely recover faster and will experience a relatively shorter recession

substack, my newsletter distributor, was for some reason down yesterday, so i couldn’t get an email out to y’all yesterday :(

hope today’s letter was interesting! if you’d like to see more content like this, shoot me an email (apeofomaha@substack.com )!

💡 something im thinking about

they’re making a documentary on bama rush (click image)

as always, i am no financial advisor! (i am no substitute for professional financial services)

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