It’s 'Foolish' to Fight Dollar Dominance as Rally Picks Up Speed

When Nick Twidale reaches his desk in Bridge Street each morning, in the heart of Sydney’s financial district, he’s greeted by a seemingly endless slew of dollar buy orders.

“It’s the easiest trade in FX,” said Twidale, a 25-year markets veteran and Asia Pacific chief executive at broker FP Markets. “Until there’s a dramatic shift in fundamentals and rhetoric with the Fed, you’d definitely be foolish to sell the dollar when the whole world is so nervous.”

The dollar’s resurgence has manifested in dramatic drops across every major currency this past week as concerns about a hawkish Federal Reserve and the potential for a global recession drove demand for the ultimate haven. The euro sank below parity, South Korean authorities verbally intervened to stop the won extending a 13-year low and hopes of a yen recovery were dashed as it tumbled back toward the key 140 per dollar level.

The rally looks to have plenty more room, with risks of hawkish comments from Fed Chair Jerome Powell at the Jackson Hole symposium later this week expected to turbocharge a rush for the US currency.