US equities have come under pressure, led by fresh selling in the Nasdaq.
Normally, you would see the US dollar rally against the commodity currencies as stocks decline, but that’s not happening. I think if it deteriorates significantly from here that will start to unfold. Right now, the Nasdaq is down 1.2% but the S&P 500 is down just 0.5%.
I think the overall dynamic speaks to an unheralded part of the dollar rally last year — flows into tech stocks and financial assets. The tech run attracted capital from all over the world into USD stocks and (increasingly) options. If we can see an orderly unwind in tech valuations, it could be a significant USD headwind.
Of course, if it turns into a rout, the dollar will benefit from safe have flows, though perhaps not as much as most expect.