The dollar could read its own obituary once again.
The greenback remains deeply overvalued against the euro, pound, and yen. We think the correction that began last year will continue to unfold over the next 12 months, with the trade-weighted exchange rate underperforming relative to the world’s biggest economies. But we don’t expect this decline to prove as fast-paced or as sustained as the consensus would suggest. We’re not convinced the Fed will cut rates before May 2024, and we think long-term yields could remain remain relatively elevated as liquidity ebbs and quantitative tightening efforts continue. This could mean that the dollar maintains positive real carry relative to currencies...