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Short-Dollar Trade Wiped Out as Risk-Off Reveals Global Cracks
The threat of trade war has put King Dollar back on its throne and usurped an ever-popular bet on emerging-market currencies in one fell swoop. As the Bloomberg Dollar Index hits a 2019 peak, a gauge that measures carry-trade returns from eight emerging markets, funded by short positions in the greenback, has given up its gains this year. Donald Trump’s trade salvo on $200 billion worth of Chinese imports on May 10 has lent strength to the dollar -- at the cost of developing-world currencies from Taiwan to South Africa to Brazil. “Emerging-market currencies are vulnerable to deterioration in the trade war,” ... (full story)