Esteemed currency analyst and investor Jens Nordvig said he has liquidated his long dollar positions and is poised to short the greenback.
The Exante Data chief executive told CNBC he’s especially looking to sell the greenback against emerging-market currencies.
The Bloomberg Dollar index has risen 4% in the past five months -- a big move by currency market standards -- and hit an 11-month high near the end of September.
Nordvig says the rally is spent.
“We have come far enough already,” he said. “I think we’re going to have a more sideways trade. … We’re finding a new equilibrium essentially.”
Anticipation of Federal Reserve tightening, economic turmoil in China and rising energy prices helped spark the dollar’s rise.
But inflation is a worry, Nordvig said. Consumer prices jumped 5.4% in the 12 months through September. And the Fed’s favored inflation indicator, the personal consumption expenditures price index, climbed 4.3% in the 12 months through August.
As for emerging markets, tourism is back, especially in Asia, and that should help their economies, Nordvig said. “New Zealand is big, Thailand is huge, Mexico is coming back.” Malaysia and Japan may get a tourism bounce, too.
Meanwhile, Morgan Stanley CEO James Gorman says the Fed should raise interest rates by the first quarter.
“You’ve got to prick this bubble a little bit,” he told Bloomberg Thursday. “Money is a bit too free and available right now.”
Stocks have almost doubled since March 2020. And bond yields aren’t too far from record lows.