Asks if George Saravelos has become incrementally more bearish on the USD.

We have been bearish for the last 12-18 months. As global risks look to be peaking, we have increasing confidence in the dollar downtrend. The move is now more concentrated in USD/CNY, not EUR/USD, which is interesting given the geopolitical backdrop.

Asks why the switch to CNY weakness.

Two elements: 1) Chinese authorities are openly allowing the currency to strengthen, a clear signal ahead of the Trump-Xi meeting. 2) Broader discussions around the petrodollar and geopolitical shifts in Iran are opening up a broader questioning of the balance of power, helping China at the margin.

Asks if the PBOC report on swap lines is a signal or narrative-fueling.

Transactional data shows CNY usage has been rising since the start of the war in Iran. It's difficult to know the precise flow, but the signal and policy intention from China is to allow more CNY strength. Despite a large negative terms of trade shock from higher energy prices, the currency is strengthening.

Asks when US policy will begin to set the tone for the dollar's next leg.

US monetary and fiscal policy is relevant. Over the last 3-4 months, there has been a repricing of rate hiking cycles in the ECB, BoE, and Asia, but not in the US, partly due to the transition to a new Fed chair. Pricing Fed hikes would be positive for the dollar, but I don't expect that to come back. The other aspect is foreign and geopolitical policy, and how the balance of power changes after the Trump-Xi meeting and the Iran war.

Asks when US policy will begin to set the tone for the dollar's next leg.

US policy is relevant. Over the last 3-4 months, there has been a dramatic repricing of ECB and BOE rate hiking cycles, but not in the US, partly due to the transition to a new Fed chair. Pricing Fed hikes would be positive for the dollar, but I don't expect that to come back. The other aspect is foreign and geopolitical policy, and how the balance of power changes.