We are pleased to let our followers know that we are launching a “chart of the week” to start conversations, provoke thoughts, open new lines of inquiry, or just cause trouble. The COTW will highlight something that is key to our own deliberations as we think about both our near-term tactical positioning and long-term views for our clients’ portfolios. Look for the chart and brief commentary every Monday.
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And now for our first COTW:
US dollar weakness from the beginning of this year through the first week of September (the Bloomberg USD index pictured here fell over 10% over the period) has been boosting returns of non-dollar assets. That most likely was related to the perception that key economies in Europe and Asia were beginning to rebound and strengthen, and in many cases, that turned out to be true. However, more recently the Dollar has strengthened, climbing over 3% since its low on Sep 8. The driver has most likely been uncertainty stemming from the Catalan movement, Brexit, and the snap Japanese election. We are following this relationship because of implications for investments in non-dollar assets and the strong-dollar headwinds US companies cite to export-related earnings.