Developed Markets

Governor Zhou’s interview with Caixin (a financial magazine in China) on February 13, 2016, was an important communications effort by Governor Zhou, who had been silent for a few months.

While the dollar is not necessarily under-valued, it is under-owned.

In contrast to the US, which is about 80% financed by the capital markets and 20% financed by banks, the Euroland’s economy is about 20% financed by the capital markets and 80% financed by banks.

We believe that the dollar weakness seen in the last two months will likely prove to be temporary, and expect the dollar to appreciate this year, against a broad range of currencies.

Like July 26, 2012, when Mr Draghi gave the famous Bumblebee speech, April 4, 2013, will be recorded in economic history books as another watershed in extraordinary central bank actions.

We remain structurally and cyclically positive on the dollar and believe that the weakness experienced by the dollar since May 2020 will likely prove to be transitory.