The collapse of dollar shows 'the biggest damage right now is to the U.S. brand'
The mighty dollar, ordinarily a safe haven during times of market-based stress, is falling apart, and its ongoing year-to-date slide is pointing to a much bigger problem for all U.S. assets.
That’s because the weakening greenback is being accompanied by a dramatic selloff in U.S. government debt and whipsaw action in all three major stock indexes DJIA +1.15% SPX +1.39% COMP +1.59% on Friday, following a historic rally and big selloffs in equities over the past week. Such coinciding moves — falling dollar, bonds and equities — like the ones seen this week are “rare, ugly and worrying,” according to a team at Evercore ISI, a research arm of of New York-based investment-banking advisory firm Evercore.
On Friday, the greenback touched its lowest levels in two to three years, as tariff-driven volatility continued to grip U.S. financial markets. Analysts and strategists were grasping for historical comparisons to what investors and traders worldwide are currently witnessing.
One episode that comes to mind is the Nixon shock of more than a half-century ago. That was when President Richard Nixon introduced a series of actions that prioritized the U.S. economy, such as a decision to delink the dollar from gold GC00 +2.31% without warning in order to protect the greenback from attacks by international speculators. One unintended consequence of Nixon’s actions is that they were seen as the catalyst for the stagflation, or weak economic growth coupled with higher inflation, which gripped the U.S. during the 1970’s.
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https://www.marketwatch.com/story/the-collapse-of-dollar-shows-the-biggest-damage-right-now-is-to-the-u-s-brand-edc17ba4
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