Matein Khalid
It took Trump 2.0 to finally dethrone King Dollar. The US Dollar Index has fallen from 110 to 104 as Planet Forex has finally concluded that aggressive tariffs on Canada, Mexico, China and the EU, coupled with stagflation risk in the US and Powell’s dovish take on a potential dual mandate pivot to easy money at a time when Germany ramps up defense spending by €900 billion and sheds its Constitutional fiscal straitjacket. The Ukraine peace deal, Xi’s Big Bang stimulus in China, higher risk premium on Silicon Valley’s ex-Mag-7 colossi and rising central bank allocations to gold now that the Dragon Empire has amassed a trillion dollars in exports have all converged to undermine the greenback.
Japanese inflation is higher than US inflation and the cherry blossoms are ready to fall on the sacred slopes of Mount Fuji, Ueda-san’s Bank of Japan can no longer postpone the inevitable monetary tightening and thus the yen is my fave safe haven G-10 currency on Planet Forex as Trumponomics enters its nasty tariffs/DOGE/mass deportation/weaponizing access to dollar funding market stage.
I am bullish on Auric since the yellow metal bottomed in late 2022 amid Powell’s succession of brutal rate hikes on the path to a 5.25% Fed funds rate. The PRC’s hunger games capitalism generated history’s biggest export bonanza and 135 EV brands that have now sealed the final nail in Tesla’s coffin. Prudence dictated a systemic risk insurance stance to own gold with the PRC and thus I am a seller of 0.5-0.8 delta puts on the gold tracker GLD. Any delivery in the 2800 range constitutes my ahlan wa sahlan yeah Auric!
Soft US data, the Cold War 2.0 between Beijing/Washington and the ominous movement of B-52 war planes to long range bomber runways in the Indian Ocean tell me that the history of Iran’s Revolutionary Guards is about to go fast forward. These trends all dictate synthetic bullish position on the price of gold as a safe haven hedge even as the Fed concedes a higher year end inflation rate (2.8% PCE).
The Empire of the Rising Sun is my Empire of the Rising Yen as the trade wars/stagflation begin but Tokyo has done its best to kiss the ring of the Emperor of Mar-a-Lago. Japan is the largest holder of Uncle Sam IOUs in the world other than the Federal Reserve. Japan is the largest source of FDI to the US and is central to Trump’s America First manufacturing renaissance. Japan has a trade surplus with the US but PM Shigeru Ishiba has made it clear that Tokyo will ramp up its purchase of US military hardware, US LNG tanker shipments, US farm belt exports and US next-Gen AI wizardry. The Age of Trump thus equates to the Age of the Dai Nippon Yen for Matti-san, domo arigato gozaimasu.
Trump’s brave new world also favours the British pound and Australian dollar that is undervalued relative to commodities at 0.6250. London and Canberra know how to play ball with Trump and ensure that the Big Guy always wins!
Also published on Medium.
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