Conventional wisdom is that Trump's presidency, which has already sent the dollar to a two year high on expectations of tariffs, trade wars, higher rates and generally higher inflation, will push it even higher after Trump's inauguration. But what if conventional wisdom is, as so often happens, wrong?
This is the question that Goldman's emerging market strategist Lu Sun asked last week (full note here for pro subs), and after answering affirmatively, suggests how to hedge what may be a possible - and to most traders, inconceivable - dollar devaluation under Trump, one which goes so far as to trigger a Plaza Accord 2.0.
Below we excerpt from the note (full version available to pro subs) which concludes with the following trade reco: 6-month USDJPY <=140, USDCNH >= 7.10 dual for ~9% offer (Risk of loss is limited to premium paid).
