Dollar Depreciation Is Sustainable: 3-Minutes MLIV

Summary

Mark Cudmore argues the US dollar is entering the next leg of a sustainable long-term downtrend after recent Treasury and FOMC policy shifts. He expects dollar weakness to support global assets, especially gold and Bitcoin, while cautioning that a policy-credibility-driven US yield surge could trigger temporary risk-off dollar spikes. He also downplays the risk of a major market disruption from next week's China-Iran sanctions focus.

• Mark Cudmore sees the US dollar as a long-term sustainable victim of recent US policy interventions.
• He views the dollar as expensive and entering a new leg of its downtrend after a yearlong pause.
• Dollar weakness is expected to ease financial conditions and support global assets.
• Gold and Bitcoin are highlighted as beneficiaries of a weaker reserve currency.
• A credibility-driven surge in US yields could create temporary risk-aversion dollar strength.
• He does not expect a hard China-Iran sanctions stance to be a major market risk next week.
• Attention is expected to shift toward Jackson Hole later in the week.