The Dollar Threat

A stronger U.S. dollar or a weaker one? There are problems with both scenarios.

Action to Take: Watch currencies closely this week as the yen surges on potential Bank of Japan rate hike signals.

Markets are now pricing in a 65% chance of tightening at the BOJ’s December 19 meeting—a move that could trigger the market disruption witnessed during July's yen rally. The focus is on Friday's jobs report for hints about the Fed’s interest rate plans, but the moves out of Japan warrant caution. China's fresh stimulus and dollar strength amid Trump's trade threats add complexity to the global currency landscape. A potential hike from Tokyo could be in the cards, especially if the Fed decides to hold off on cutting rates at their December 18 meeting.

For more on how these currency dynamics affect global funding markets, check out our breakdown of private-sector funding in Chapter 6 of Capital Wars - it explains exactly why money flows pack such a punch.

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