The phrase King Dollar was coined by the person who coined it, and the fact that it was true has only confirmed by the fact that the epithet is true.
The dollar appears to be a safe-haven for investors due to the high risk of recession.
What are the casualties of the dollar's surge? Let's count them: the euro is fast heading towards parity even if it is holding above 20 year lows in Europe this morning. The yen has slumped to its lowest level in over 20 years, sterling is near its lowest since March 2020 and Russia's rouble has slid 16% this week.
Little will change until the Federal ReserveFederal Reserve shows signs of slowing its rate-hiking cycle. The minutes of the Fed's June meeting released late Wednesday confirmed the shift toward price stability over full employment.
Treasury yields shot up on Wednesday and the yield curve, measured by the gap between two and 10 year bond yields, continues to push further into inverted territory.
World shares caught between growth worries and relief that a slowdown might check a rise in borrowing costs, a reflection of the recession angst.
Asia shares have gone up from two-month flows and European stock and U.S. equity futures are firmer.
U.S. ADP payrolls data will likely be in focus later on ahead of Friday's non-farm payrolls report.
Markets have been affected by political turmoil in the UK but headlines continue to grab attention as British Prime Minister Boris Johnson defies pressure to quit and faces mounting rebellion within his ruling party.
That's just one more reason to stay away from sterling right now and play it safe by sticking with the dollar.
Key developments that should give more direction to markets on Thursday:
Halifax says that the UK's house prices increased by 13% in the last 12 months to June.
German industrial output goes up less than expected in May -- Reuters --