huangjin

Why Are Investors Returning to the Dollar?

I don't think investors are "returning to the dollar" in a positive sense of the word, although there certainly is some of that taking place. What is driving the rally, which started in July, is the closing of short U.S. dollar positions. Everything from explicitly short positions on the dollar, to implicitly short positions, such as long foreign equities, are unwinding. It's not just investors either. Corporations and governments borrowed in U.S. dollars and they are unwinding those positions or have halted new borrowing. All of which is bullish for the U.S. dollar in the short term.