The US dollar has risen sharply this week, reaching its highest level of the year as continued fears about the spread of the “delta” variant and further evidence of growing risks in China (around its economic slowdown, the widening regulatory crackdown on major tech firms, and concerns about its opaque financial system) have weighed on risk appetite and increased demand for safe havens. While we continue to forecast a robust economic recovery, the near-term risks in financial markets appear skewed to the downside, which may well continue to support the greenback.
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