Don’t Expect the USD to Stay Steady in Volatile Markets for Long

Talking Points:

• When the broad market is volatile or responsive to key themes, it is unlikely individual assets fight the tide

• USDollar may be at 12-year highs but it showing the calmest conditions in 16 months

• If risk-churned financial markets keep boiling, the Dollar will inevitably capitulate with volatility and drive

See how retail traders are positioning in the majors in your charts using the FXCM SSI snapshot.

The Dollar paints an interesting picture. In a market where volatility is the standard and headlines are frequented by high-profile themes (China, global growth, universal deleveraging), the currency looks like an island in rough seas. While certain assets or markets can hold back against the pounding surf for a while; eventually, it joins the fray. For the Greenback, the influential monetary policy catalyst has been well-used. As a safe haven, we discussed the Dollar's more extreme leanings for risk trends. Yet, for certain pairings, the rate view is more sensitive and risk seeps in from leveraged counterparts. The calm facade the Greenback has crafted will soon crack; and when it does, the currency will show how active such a connected currency can be. We discuss anomalous reverting to greater forces with a focus on the Dollar in today's Strategy Video.

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