USD: Tactical haven support but structural headwinds – BBH
Brown Brothers Harriman’s (BBH) Elias Haddad notes the Dollar is tactically supported by haven demand linked to shipping risks in the Strait of Hormuz, even as the bank stays cyclically neutral on USD. Haddad expects DXY to trade back into a 96.00–100.00 range and maintain a structurally bearish Dollar view due to US policy credibility.
Haven bid contrasts with structural bearishness
"Financial markets remained driven last week by war-related headlines, with the safety of shipping through the crucial Strait of Hormuz the primary barometer for risk sentiment. Brent crude oil prices rallied back above $100 a barrel while the dollar powered forward against all major currencies, pushing the DXY to its highest level in nearly ten months."
"Tactically, USD can continue to benefit from haven bid driven by dollar funding needs until we reach peak fear regarding shipping through the Strait of Hormuz. Demand for short-term USD funding tends to spike during periods of stress due to the dollar’s dominant role in the global financial system (trade invoicing, cross border lending, global bond issuance, FX reserves)."
"Cyclically, we remain neutral USD and expect DXY to resume trading within a 96.00-100.00 range. DXY has overshot the level implied by rate differentials between the US and other major economies."
"Structurally, we maintain our long-held bearish USD view because of fading confidence in US trade and security policy, worsening US fiscal credibility, and the ongoing politicization of the Fed."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
US PPI report to test Bitcoin, gold and Nasdaq as December rate hike looms
Nvidia falls to its lowest valuation in 14 years! "Super bull" Tom Lee calls for bottom fishing, retail investors are buying more as it drops, but Wall Street is divided
After the market opened on Thursday, retail investors went against the trend and bought up Nvidia, with net purchases reaching $111 million in just half an hour, setting a record for the same period. Investors such as Tom Lee have publicly supported the company, with institutions optimistic about strong order backlogs extending to 2028, robust revenue growth, and opportunities created by declining valuations. Meanwhile, institutions like Bernstein and Goldman Sachs have become more cautious about Nvidia's outlook, with concerns focusing on management succession and technological leadership following Jensen Huang's departure.
Jane Street boosts Fidelity Bitcoin ETF stake 8x in Q3, trims BlackRock IBIT
From SpaceX to Anthropic, the market has new strategies for dealing with tech giants' IPOs
The market's response strategies to major listings are currently centered around "index inclusion expectations": the new regulations allow mega IPOs to be included in the six major indices within 15 days, triggering concentrated buying by passive funds. Investors are positioning themselves in advance and using options to hedge and amplify buying power. However, Anthropic has a free float of only about 6%; shares available for sale by employees on the first day and privately placed shares with no lock-up period may create supply pressure. On the other hand, index arbitrageurs are facing a rare opportunity.
Crypto prices
More
