Fiscal policy returned to the forefront of G10FX drivers in early September — which isn’t particularly positive for the dollar — and part of the structural bear case we identified earlier this year. In this episode of FICC Focus, Bloomberg Intelligence Chief G10FX Strategist Audrey Childe-Freeman and Dr Win Thin, chief economist at Bank of Nassau 1982 Limited argue that the dollar’s next leg lower could be cyclical in nature, with any further weakening in US non-farm payrolls likely to engender continued Fed rate-cut talk into the September FOMC Meeting. Win and Audrey also acknowledge a less-supportive context for the euro, but conclude on enough dollar bearishness to validate $1.20 euro-dollar later this year. For now defensive FX such as the Swiss franc has its merits.

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