Fidelity Investments’ global macro director Jurrien Timmer says that the US dollar’s global supremacy may erode further if one event occurs.
In a new thread on the social media platform X, Timmer says that if the Fed is forced to prop up the bond market, such as by buying the debt securities, the US dollar index (DXY) may tumble even lower.
“If the Fed is forced back into the bond market to hold down nominal and real rates, the dollar may well lose more of its supremacy premium. Currencies are the release valve for unsustainable fiscal policy, as Japan found out a few years ago. The same is now true for the dollar, which continues to lose strength despite the Fed’s hawkish policy stance.”
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