The dollar’s appreciation has “peaked,” the U.S. economy is “doing nothing” and China will soon be vying with the country on the global stage, an economist has told CNBC. “We’re having a perfect storm for the dollar,” Steen Jakobsen, the chief economist at Danish investment bank Saxo Bank, told CNBC Monday.
A rate hike by the U.S. Federal Reserve might be just around the corner, but Jakobsen described it as nothing more than a “margin call,” implying that it was a warning shot to investors that a seven-year bull run for equities might be coming to an end. “On any model I look at, (the U.S. economy) is still way too weak in a normal cycle to actually take and live with the higher interest rate,” he said.
The greenback has rallied 20 percent against a basket of leading currencies since the beginning of 2014. This has come as the Fed looks to normalize its monetary policy after several years of bond-buying on a massive scale and ultra-low interest rates.
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