Dedollarisation Day
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Why is the US dollar hitting a multi‑year low and what does it mean for markets?
The US dollar hits a multi-year low. We'll look at where that could go next as there's more evidence of foreign investors pulling out of longer dated bonds. But still, equity's doing okay today, perhaps because they think interest rates might come down faster, particularly if there's a new Fed chair shouting from the sidelines. And US PCE today, with the Fed's preferred inflation measure, and much more today as well. There's a bit going on. It's Friday, the 27th of February. February twenty twenty five, it's the morning call from Nab. Good morning. So the US dollar edging ever lower, down to a new low today, getting below ninety-seven on the DXY for the first time since early twenty twenty two. It's around ninety-seven point three now, which is not point four percent lower than yesterday.
Uh the Aussie is up naught point six percent to sixty-five US cents, the yen also up naught point six percent, the Canadian dollar up naught point seven percent, the pound is up half a percent, not point four percent for the euro. Equities are strong. There we go.9% lift in the Dow at the close, 0.8% for the SP, and 0.9% for the NASDAQ. The Russell 2000 is up 1.7% this morning, with real estate performing the worst out of all the sectors. The shares there are down 1.2%. The VIX is quite subdued now. The fear gauge down to 16%. So uh how many more record highs will we break if this mood continues? If it's a different stroke. For Europe though, with a slight fall in the European uh Eurostocks 50 uh and the CAT carant, but a 0.6% lift in the DAX, 0.2% higher for the FTSE 100.
US 10-year treasury yields are down five basis points to 4.24%. We've got small moves in Europe though. Aussie 10 years at 4.1% yesterday, now up to 4.16% on futures. And oil, well, it's been on a bit of a jump. Jenny, uh WTI is up 0.9% now to 6550 a barrel, but it did reach 6640 earlier, and Brent has gone between 6740 and 69.
How are foreign investors withdrawing from long‑dated US bonds and what impact does that have?
It's around 68 right now. So, how do we link this rising equity situation going on in America to the economic data, which is soft? That's a question for Nabs Rodrigo Catrill. I wonder whether some of it is the prospect that interest rates are going to go down a lot. Because we're going to get a new Fed chair who's going to take him that way. He's going to take rates much lower and faster. Even though Jerome Powell's got eleven months to go, uh it seems Donald Trump likes the idea of an early transition that would mean the uh replacement could talk openly and drive investor expectations. Uh you'd assume that sort of behaviour would just make uh Powell sort of completely ineffective and would probably quit as a result of it.
Which uh I'm fairly certain that might be the game that Donald Trump wants to play.
A Moneyfield. Yeah, there's There's been a great deal of speculation following a a Wall Street Journal article yesterday um noting how po uh Trump is already kind of tossing around three or four names to to see who could uh replace um Powell and also whether to uh make that nomination um as soon as possible. Um now the the interesting thing is that from a market perspective you're seeing a reaction uh particularly in the front turn of the curve, uh pricing this expectation of of further easing. Um which in part has been because of this expectation that we will eventually have a fair chair that is more inclined towards um you know cutting and and and and the big question delivering, you know, what Trump wants.
So um that is kind of a um you know the president needs to be careful what he wishes for Because at the same time, if that is the case and and you have a Fed chair that is seen as not being super independent but rather uh you know representing the views of the president, um then that puts a question mark in terms of the credibility of the Fed and its ability. Um so so then um you know dollar weakness in that scenario makes sense, um but at the same time you you probably start seeing further selling in the US trusting market, particularly in the back end of the curve because it will reflect this this idea um that the Fed is no longer as committed to its inflation targeting mandate as it would otherwise.
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Chapters
8 chapters
1
Why is the US dollar hitting a multi‑year low and what does it mean for markets?
0:01–1:57
2
How are foreign investors withdrawing from long‑dated US bonds and what impact does that have?
1:57–5:12
3
What role could a new Fed chair play in driving the dollar lower?
5:12–8:00
4
Why are US consumer spending and Q1 GDP revisions weakening the economy?
8:00–10:23
5
How are rising equity markets reconciling with soft US economic data?
10:23–12:58
6
What are the implications of Japan’s June CPI and BOJ policy outlook?
12:58–15:12
7
How are China’s industrial profits and global tariff battles affecting trade?
15:12–17:57
8
What geopolitical risks (Iran, US‑Middle East) could influence the dollar and oil markets?
17:57–18:51