FICC Focus Dollar at Crossroads as Tariffs, Growth Path Evolve: FX Moment
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Mar 1, 2025 Valentin Petrescou, a Senior Portfolio Manager at Lombard Odier Investment Managers with expertise in global macro strategies, discusses the shifting landscape of the U.S. dollar. He argues that emerging tariffs and trade war scenarios may not boost the dollar as expected. The conversation dives into currency diversification, spotlighting the yen’s role and its potential as a safe haven. They also touch on the fading prospects of euro-dollar parity and suggest more promising strategies in Euro-Swiss investments due to geopolitical tensions.
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Dollar Dominance in Question
- The dollar's strength during trade wars might be overestimated.
- De-dollarization and new trade routes could weaken its dominance.
Trump 2.0 and Tariffs
- Trump 2.0's decisive approach to tariffs may not boost the dollar as before.
- The current inflationary environment and potential for US economic harm differ from past trade wars.
Yen's Allure
- The yen is an attractive diversification option due to improving domestic conditions, defensive appeal, and undervaluation.
- It offers potential upside, especially against the dollar.