What to Know About Recessions, Including the Next One
None of the factors that would ordinarily be needed for the dollar to begin a weakening trend are in place, such as rising rates overseas and a narrower growth and yield differential between the U.S. and other countries, according to Randol. Now it may require “a rare combination of more U.S. economic pain and benign financial markets” to set off that process, he said.
While the market narrative on the dollar so far has been focused on the prospects of a currency war, the story line may end up being centered on a coordinated intervention similar to 2000, when central banks joined forces to support the euro, the strategist said.
“To be effective, intervention has to be coordinated by global central banks and finance ministries,” Randol said. “The U.S. can’t expect to achieve a weaker dollar alone.”
--With assistance from Robert Fullem and Charlotte Ryan.
This article was provided by Bloomberg News.