Forex is the next trade war frontier

I have been a dollar bull for the longest time as I firmly believe that liquidity is tight in US dollar funding, in particular for non-US entities. However, it's also clear to me that in this trade war, with the lack of the globalisation effect, a lower US dollar is required.

A lower dollar will help US exports, emerging markets, economic growth and overall liquidity. But most importantly, the comments from Trump indicate he and his administration will pursue a lower-dollar policy, either directly through verbal intervention or by forcing the Fed to cut all the way to 100 bps or even 'zero bound'.

Recent weeks have told us that the Fed academically is ready to embrace ‘zero bound’ and with the US election cycle starting in earnest this week with Trump's ‘gift’ to the stock market (promising to meet President Xi) – the US dollar may be about to be ‘weaponised’.

I'm presently in China – I got lot of new information about China which will be forthcoming in a wider analysis next week.