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Analysis

Dollar Rally Is Crushing a Popular Trade

Instead of sliding into recession, the U.S. economy has powered ahead, even as growth stalls overseas. Investors are responding by shifting funds to the U.S. dollar.

By Ruth Carson, Nishant Kumar & Carter Johnson | September 19, 2023 at 04:58 PM
Photo: An employee uses a machine to count US$100 banknotes at the Hang Seng Bank Ltd. headquarters in Hong Kong on April 16, 2019. Photographer: Paul Yeung/Bloomberg An employee uses a machine to count US$100 banknotes at the Hang Seng Bank Ltd. headquarters in Hong Kong on April 16, 2019. Photographer: Paul Yeung/Bloomberg

Mark Nash thought the U.S. dollar’s rally was done.

It was late 2022, and his bets against bonds had paid off after the Federal Reserve’s interest rate hikes sent markets into a tailspin. So his fund at Jupiter Asset Management, like many others, was placing a popular wager on the next phase of the cycle: As the Fed’s tightening neared an end, it would halt the stampede of cash that raced in to seize on rising rates—and the U.S. currency would fall.

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