Summary

• Despite the new Fed Chair's structural view on prices (lower, due to disinflationary forces from AI), the market is now pricing in a rate hike by year end, with a coin flips chance of two hikes.
• The market view on rising rates is fuel for the dollar. But that's short-term cyclical. The dollar breakout looks more like a structural capital flow regime in the early stages.
• Dollars are in demand to access: the U.S. AI boom, stronger U.S. growth, scarce commodities priced in dollars, the petrodollar (reinforced by America's control over energy chokepoints), Treasuries, and now dollar stablecoins.

Originally published on June 22, 2026

We head into the week with the dollar testing 40-year highs against the yen and trading around 17-year highs against the Korean won (global financial crisis levels). Both central banks