Are Trump's Policies Harming the Dollar's Reign?
Live on Bloomberg TV
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00:00So we have been on the show tracking the weakness of the USD over the course of this year. And I guess the question that people are is asking is whether this is just a temporary pullback in relation to the uncertainty surrounding economic policies stemming from the US, or is it a structural retrenchment and a real diversification play away from the USD that's taking place? Joumanna, that's the multi-trillion dollar question that everyone is indeed trying to answer. If history is any guide, definitely price for greenback weakness ahead. Just take a look at how the dollar's performed since President Donald Trump took office. 10% down versus the euro. The pound, the Swiss franc and a down against every major currency in the world. Definitely a consensus trade, whether you're in Tokyo, Singapore or Hong Kong or New York is indeed a bearish dollar positions. So definitely watch this space. It is a $7.5 trillion a day market, after all. And overwhelmingly, people are expecting dollar weakness ahead. Yeah. And there's something that you talk about in the book. Take this this concept of a vicious cycle. Weaker USD, obviously could be inflationary, could expand the deficits even even further. What is the potential for this vicious cycle to kick in in terms of amplifying the weakness that we're already seeing in this market? Another great question. Very much so. In focus is the sell America trade. And as you correctly pointed out, is there a risk of a vicious cycle? We have seen pockets of explosions, particularly in Asia, for example, to Taiwan. Last month, surging, South Korean, once surging as well. Now, these aren't just moving in isolation. These incidents have, you know, really brought to financial markets as a whole and will have impact on the US economy because, after all, global trade is global trade for a reason. So as the trade war intensifies, you know, and the US deficit situation doesn't improve, this will definitely be an area of focus where we could see a lot more stress ahead. Okay. So then the question becomes, what is the viable alternative to the USD? A lot of uncertainty still about the European growth prospects. We've seen money pour into gold. Even Bitcoin was at one point pitched as an alternative to the USD, but it doesn't obviously enjoy the same characteristics of safety and being a reliable medium of exchange. So where does the money go if it's not in the dollar? It's another great question and believe it or not, it is something that I debate with traders, fund managers and strategists virtually every single day from Singapore. What is the alternative to the dollar Now if we take a look at the breakdowns? Gold is definitely one that has been touted as a potential alternative. You've also got Euro, the second most traded currency in the world and yen as another. But how viable they are as a true alternative when you consider that a dollar is at 88% of all trades in the world. You know, it's certainly up for debate. People are certainly hunting for alternatives. Whether or not that Titanic moves from the dollar remains to be seen.
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