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The Greenback is a Victim of Its Own Success | Chinese Policy Makers Prepare for Global Currency Disruption

Published August 12, 2019
  • The surge in the US dollar is continuing to erode the profits of US multinational companies, and has raised the costs for foreign corporations that have trillions of US dollar-denominated debt. This is all especially problematic today amid growing signs the global economy is teetering on the edge of a recession. The dollar has been viewed by some economists as the potential catalyst for the next US and global recession, anticipating the dollar could wind up a victim of its own success.
  • Prediction are holding strong that the Bank of Canada Governor Stephen Poloz will hold interest rates until 2020 despite renewed speculation about an impending global recession. A majority of economists still expect Poloz to keep the benchmark overnight rate at 1.75% until the end of 2020. The surprising robustness of the domestic economy is keeping many market participants in a more hawkish camp.
  • Authorities at Hong Kong’s airport cancelled all remaining flights on Monday after protesters filled the main terminal building, in what is the biggest disruption yet to the city’s economy since demonstrations began in early June. China stepped up its rhetoric, saying the protests show signs of “terrorism.” This comes in addition to the threats of Chinese policy makers rolling out major monetary stimulus, keeping options in reserve as the trade standoff with the US risks forming into a global currency war.