We saw another sharp rise in global risk aversion last week following US threats to take Greenland and impose tariffs. In the end, neither happened. But what the threats...
The fact that the surge in tariff-generated risk aversion this year saw the US dollar and treasury bond prices fall, not rise as they usually do when risk aversion...
The US dollar has fallen by close to 10% in trade-weighted terms from the 20-year peak that we saw last October.
The US dollar has the upper hand at the moment with other currencies hit by what can be called a double whammy.
The risk aversion remains high in many financial markets, and that continues to suggest a firmer dollar.
The dollar usually rises when risk aversion soars. Numerous emerging market crises, the global financial crisis and, most recently, the pandemic have all proved this...
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