Australian shares are set to open higher. $A edges up. All S&P 500 industry groups advance, led by energy. Dalio sees stagflation threat. Follow updates here.
The US dollar has scope to rally as much as 5 per cent more if financial conditions tighten enough on the back of Federal Reserve interest-rate hikes, according to Standard Chartered strategist Steve Englander.
The move upward has come amid a surge in Treasury yields that’s been fueled by a combination of inflation fears and expectations around the likely Fed response to that. The increase in borrowing costs, and more downbeat expectations for economic growth, have also hurt riskier assets and boosted the appeal of relative havens such as the greenback.
The jump in the Bloomberg dollar index since last July has been accompanied by a 2.5-point tightening in the Bloomberg financial conditions index, according to Englander. He reckons that another 1.2-point move in the financial conditions gauge, which would bring the index to the tightest levels since 1998, would translate into a further 5 per cent strengthening of the dollar.
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