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Giorgio Borelli's avatar

I’m not so sure this is the two only reasons, though one must acknowledge all else you mentioned holds

- the epicentre of stimulus could shift elsewhere: limited fiscal and monetary capacity in the US (in relative terms, as compared to the past), more capacity elsewhere (Europe, China)

- derisking and onshoring are new keywords, they imply increased commodity demand

- fiscal policy is gaining dominance on monetary. Fiscal is inflationary (CPI), monetary inflates asset prices

- inflation and commodities have historically challenged US markets and the dollar that did thrive in disinflation, not with inflation

- the US administration wants to be more competitive against China: a weaker dollar is the only way in the current decade

- hugeUS debt: inflation will force the Fed to implement QE, if not YCC. Negative real rates will drive the dollar to the dogs

Why leave out all these reasons for dollar weakness? The regime IS changing. It is not true that nothing has changed structurally for the dollar. Investors are not emotional, they are also emotional. It means the dollar will have to be devalued on account of the new regime AND the emotions of investors

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Stefano Salvadori's avatar

I guess this shows that every European state goes by its own way and the union if far from being reached

The Euro and the ECB alone can’t make the European project without a common financial market and common international policy

We are far from that

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