Dollar Downtrend Primed to Kick Back In: 3-Minutes MLIV
Speakers
Tom Mackenzie
— Anchor, Bloomberg
Summary
The video discusses a potential downtrend in the US dollar as strategists expect other central banks to hike faster than the Fed. It also covers the Bank of Japan's inflation challenge and the yen's continued weakness. The conversation touches on central bank actions in Asia and their impact on currencies.
- Dollar had a positive month but strategists see it as part of a longer downtrend.
- A reopening of the Strait of Hormuz could trigger dollar weakness by unwinding haven flows.
- Market expects Fed to hike early next year, but ECB, BOE, and others may hike sooner, pressuring the dollar.
- BOJ faces runaway inflation and credibility issues, needing to hike.
- Yen remains weak near 160 level and could face more pressure without stronger BOJ signals.
- Some EM central banks hike aggressively to protect currencies, but it's not working well.
Trade Ideas
Dollar to weaken against major peers.
The dollar is expected to weaken relative to its major peers because other central banks like the ECB and BOE are expected to raise interest rates faster than the Fed, while the Fed is not expected to hike until early next year, reducing the dollar's yield advantage.
Yen to weaken further on BOJ inaction.
The BOJ must hike because of runaway inflation and credibility concerns; if it doesn't signal more hikes, the yen could come under more pressure even if the dollar weakens.
Up Next
This Bloomberg Markets video, published May 29, 2026, features Tom Mackenzie discussing DXY, USD/JPY. 2 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Tom Mackenzie · Tickers: DXY, USD/JPY