Betting on a stronger currency sounds sensible, particularly when market interest rates and inflation expectations are rising. It is why the languishing of the US dollar this month, extending its hefty decline in 2017, has many in the foreign exchange market and broader investment universe trying to make sense of why the global reserve currency has such meagre support. Crédit Agricole describes it as "a bit of a mystery", while Bank of America Merrill Lynch calls it a "head-scratcher moment". As Adam Cole at Royal Bank of Canada Capital Markets, points out: "Most of the cyclical indicators are positive, rate expectations are still rising and the Fed is delivering, and yet the dollar just isn’t reacting to any of that." A weak dollar certainly suits many: American exporters, buyers of US shares and emerging markets, and Donald Trump, who has complained at length about trade partners who let their currencies depreciate. However, the risk from a sliding dollar is that it means investor...

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