Dollar ‘Fiscal Frown’ Theory Has Deutsche Bank Warning of Losses

The dollar is at risk of losses whether the US government lands in a fiscal crisis or a recession, according to George Saravelos, Deutsche Bank’s global head of FX strategy.

“A dollar fiscal frown is the best way to picture things,” Saravelos wrote in a note on Monday, riffing off the so-called “dollar smile” framework Stephen Jen put forward more than two decades ago. Upcoming budget negotiations will determine where the dollar lands on that curve.