Why the Dollar Could Drop

In this episode of "The Markets," Chris Hussey interviews Brian Dunne about the dollar's current state and future prospects. Dunne suggests the dollar still has room to depreciate, particularly against higher-yielding currencies like the Brazilian Real, Mexican Peso, and South African Rand. The conversation explores the stalled debasement trade, the impact of upcoming US data and the Fed's policy decisions, including potential rate cuts and the appointment of a new Fed chair. Dunne favors shorting the dollar against the Chinese yuan and investing in a basket of EM carry trades. He estimates a potential 5-10% dollar depreciation, contingent on the repatriation of previously hoarded dollars. The discussion emphasizes the importance of relative investment returns between the US and other countries, suggesting a shift away from over-allocation to US assets.