TD Research discusses the current market conditions and flags a scope for higher USD over the coming weeks.
"The market meltdown has commenced, revealing the tensions between the improvement of the global outlook and the extraordinary stimulus measures that remain in place. The surge in volatility isn't surprising, given a host of varying signals have been flashing red on the current state of global markets," TD notes.
"As we noted yesterday, a broader market meltdown was likely to propel the broad USD higher, leaving the EUR and other funding currencies under duress as well. This backup in yields is likely a speedbump rather than a roadblock to 2021 global reflation, though again the transition between themes, and subsequent positioning adjustment will accelerate the turbulence," TD adds.