AllianzGI's Riddell: The US dollar is now a 'risk on' currency

US dollar stands to suffer in next market wobble

Rarely has the US dollar's positive correlation to risky assets been stronger than now, writes Mike Riddell, fixed income portfolio manager at Allianz Global Investors.

The perception of the US dollar is that it is a safe haven currency; when things go wrong in the world, you want to own it. This perception has been broadly accurate since 2004, where the US dollar has tended to be negatively correlated to risky assets. Since 2014, however, the correlation has weakened, and the US dollar has at times more closely resembled a risky currency than a safe haven.   Capital has increasingly been attracted to US markets by stronger relative growth and higher relative interest rates, which has served to push up both US equity prices and the US dollar. Dona...