FX Daily Dollar Support Broadens

The US dollar is rallying on strong labor data and potential Fed hike expectations, causing an unwind of 'debasement' trades in gold, bitcoin, and the Swiss franc.

Key Takeaways

• 1.The US dollar is gaining strength on the back of upside surprises in labor market data, specifically JOLTS, which is prompting markets to reconsider potential Fed hikes.
• 2.The popular 'dollar debasement trade'—involving gold, bitcoin, and the Swiss franc—is under pressure and being unwound as a more hawkish Fed outlook emerges.
• 3.ECB hawkishness, with 50bp of hikes priced in through September, is providing a floor for the Euro despite rising US yields.

Table of Contents

• USD: De-basement trade under pressure
• EUR: Hawkish ECB to protect the euro's downside
• CHF: Coming under some pressure?
• CEE: Hawks and doves take turns

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