In December’s end of year wrap post, one of the 2025 actions to take was:
If the dollar keeps appreciating, place a short wager via options.
That was published December 22nd. On January 8th we initiated our short position. And it so happens that, to date, the dollar’s peak value was on January 8th.
Admittedly, we did not fully explain this trade in the end of the year wrap. Luckily John Authers put together a chart that does just that.
We’ve seen this movie before. It was January 2016.
The simple thinking is:
Tariff announcements and other "isolation-type” policy announcements strengthen the dollar.
A. Implementation of these policies materialize in a much less meaningful way than headlines lead you to initially believe.
B. Trump does not ultimately want a strong dollar. In fact, he actively wants a weaker dollar.