Newsletter · 2026-08-06 · Ashutosh Agarwal

Dollar Bears Get a Real Fight Before Jobs Day - The Dollar Brief - August 6, 2026

A synthesis of what FX and macro podcasts said about the dollar around the August 5, 2026 session, as the bearish dollar consensus finally drew heavyweight pushback from Apollo's Torsten Slok and Johns Hopkins economist Steve Hanke ahead of the July jobs report.

The Dollar Brief

August 6, 2026: Dollar Bears Get a Real Fight Before Jobs Day

For a solid week, the dollar story has run in one direction. The dollar is soft. The new Fed chair blew it. The yen rescue won't hold. Doom, mostly.

In the last day or two, the other side of the argument finally showed up, and it brought some heavyweights. The chief economist of one of the world's biggest private-money firms reframed the Fed's new silence as a smart move, not a blunder. A veteran chart-reader argued the dollar quietly bottomed months ago and is now in a bull market. A well-known economist said the entire "weak yen" story the headlines keep repeating is backwards. And the people who actually trade currencies for the big banks turned out to be far less panicked about the dollar than the doom crowd.

All of it gets judged tomorrow morning at 8:30, when the July jobs report lands. One number, and the week's whole debate tips one way or the other.

TL;DR

The Fed's new silence, defended by a big-money insider. Apollo's chief economist Torsten Slok compared the old Fed habit of telling markets where rates are going to giving children candy, take it away and "of course they will get upset." His verdict: scrapping the forecasts gives the Fed "more optionality" in a shaky world, at the cost of more market swings. On Brew Markets (Aug 5).
A lone voice says the dollar already bottomed. Technical analyst Chris Vermeulen argues the dollar "put in a bottom, really put in a bottom in January of this year" and "has technically just entered a bull market," now testing support near 99. (A precious-metals show, so treat as a chart-reader's opinion.) On Sprott Money News (Aug 5).
"Financial media has Japan dead wrong." Johns Hopkins economist Steve Hanke says the yen is weak not because Japan's money is too loose but because it's too tight, the money supply is growing just 2.2% a year when it needs about 6%, so the popular "low rates = loose policy" story is backwards, on Hedgeye (Aug 5).
What the currency desks actually think: less doom than you'd guess. JPMorgan's FX team called last week's dollar drop "a tactical setback," not the end of their dollar-up view, pointing to still-solid carry, a live September, and an Iran/oil safe-haven bid as offsets, on At Any Rate (Jul 31).
The dollar is now a stock-market story. Deutsche Bank's Malika Sacheva says the dollar's strength lately has been propped up by foreigners buying US stocks, not US bonds, so the real risk is that the dollar falls in the next big equity sell-off, on Bloomberg Surveillance (Jul 31).
The dollar loses a little of its edge, but it's not just a US thing. Point72's Sophia Drossos says the dollar "is going to lose a little bit of interest rate support," but stresses the European and UK central banks are pausing too, so this is a broad shift, not a solo US wobble, on Bloomberg Surveillance (Jul 30).
The White House's own version. National Economic Council director Kevin Hassett gave the administration's read: "full confidence" in Warsh, whom he calls "a realist" who "will be independent," while dismissing the old Fed's inflation model as "outmoded science," on Bloomberg Talks (Jul 30).
Tomorrow's jobs number is the judge. With no Fed guidance to lean on, a payrolls print near or above 100,000, up from June's 57,000, would revive the case for a September rate hike and put a floor under the dollar; a weak one keeps the Fed parked and the dollar soft, per LPL Research (Aug 4).

What's new

The Fed's silence, reframed as a feature, by someone who moves real money

All week the new Fed chair Kevin Warsh has been the villain: he held interest rates, scrapped the Fed's long habit of telling markets its plans ("forward guidance"), and watched 30-year government borrowing costs spike to their highest since 2007. This week the most interesting defense came not from a pundit but from a man who allocates hundreds of billions of dollars.

On Brew Markets (Aug 5), Torsten Slok, chief economist at Apollo Global Management, one of the world's largest private-investment firms, reached for a kitchen-table metaphor. For years, he said, the Fed handed markets a forecast of where rates were going, and "financial markets almost became lazy" as a result: "if this is where interest rates are, then we don't really need to do much because the Fed is telling us where interest rates will be." Warsh, he said, is taking the candy away: "If you had given your children candy for several years in a row and now you're saying you're no longer getting candy, of course they will get upset and they have to get used to that."

Slok's key point is that this is a deliberate trade. By refusing to publish a forecast, the Fed gives up the comfort of predictability but gains freedom: "by giving up flexibility" in the old system, the Fed had "locked in" to views it might later regret; now "we want the complete freedom to change our view from meeting to meeting." The cost is that traders have to do their own homework, and when they disagree with each other, prices move more. As Slok put it, "by taking away the guidance on where interest rates will be… of course you will have more volatility in financial markets."

Is that good or bad? Slok's honest answer: it depends who you are. "It's good in the sense that the Fed gets more flexibility in managing the economy. But it's unfortunate for the investors that now have to live with more volatility." And he made a subtle case for why now, precisely because so much else is already uncertain (the Middle East, inflation, Japan), Warsh may want maximum room to react: "maybe Kevin Warsh is doing the right thing by saying I need some more optionality given these risks and shocks."

That said, Slok is not a cheerleader for markets here. Asked whether he's a bull on US stocks at these levels, he laid out three separate downside risks that all point the same way: if Iran keeps the Strait of Hormuz shut into the November midterms, oil goes up; if the AI payoff comes slower than hoped, tech stocks fall; and "if Kevin Warsh is not done… raising rates, that is also a downside risk." His conclusion: "the downside risks to the S&P 500 are bigger than the upside risks at the moment." So the defense of Warsh's method comes wrapped in a warning about what that method could do to markets.

A lonely voice: the dollar already bottomed

Almost everyone this week described a dollar that is soft and drifting lower. One analyst looked at the same chart and saw the opposite.

On Sprott Money News (Aug 5, recorded Aug 4), technical analyst Chris Vermeulen argued that if you "ignore the fundamentals" and just read the price chart, the dollar "has come down… put in a multi-year kind of basing formation" and "is now starting to make higher highs, higher lows." His blunt call: the dollar "really put in a bottom in January of this year" and "has technically just entered a bull market." The recent slide he chalks up to a one-off: "we've had a very sharp pullback recently with the Fed and the yen… a very emotional move and a lot of unwinding," but "I don't look too much into headline news driven moves." His forecast is that the dollar holds support near 99, trades sideways "for a while," then breaks higher once the stock-market rally stalls.

Two caveats worth stating plainly. First, this is a precious-metals show, and the whole point of Vermeulen's dollar view is that a firm dollar "is going to keep a cap on precious metals", so his audience and his framing tilt a certain way. Second, this is pure chart-reading, explicitly setting aside the fundamentals everyone else is worried about. But it's a genuine, falsifiable counter-thesis to the dollar-doom chorus: if 99 holds and the index climbs back over 100, the bears are early; if 99 breaks, he's wrong. It's a clean line in the sand.

"Financial media has Japan dead wrong"

Here's the most contrarian idea of the week, and it goes straight at the story this newsletter, and everyone else, has been telling: that the yen is weak because Japan keeps interest rates near 1% while everyone else pays much more (the roughly 275-basis-point, or 2.75-percentage-point, US-Japan gap that makes "borrow cheap yen, buy higher-yielding assets abroad", the carry trade, so profitable).

On Hedgeye (Aug 5), Steve Hanke, the Johns Hopkins economist known for his work on money supply, told host Keith McCullough the premise is simply wrong. "The narrative is that Japan has very easy monetary policy… and the reason they say that is because interest rates are relatively low. But monetary policy is not about interest rates. It's about changes in the money supply." And Japan's money supply, he said, "is growing, M2, at 2.2% per year" when by his rule of thumb "it should be growing at about 6% per year." His conclusion flips the headline: "So monetary policy is not loose… The yen has been tanking because of tight monetary policy," because slow money growth caps how fast the economy and prices can grow, which in turn keeps a currency "constantly under pressure." He threw in his own house rule for good measure: "95% of what you read in the financial press is either wrong or irrelevant."

Hanke also had the week's sharpest framing of Treasury Secretary Scott Bessent's role in the yen rescue. Bessent, he said, is a "big player", someone with "a lot of ammunition" and "no rules that constrain him… not constrained by a profit and loss constraint." The danger of a big player, in Hanke's telling, is that "economic fundamentals become less and less important, and the big player becomes more important", so now everyone paid in dollars or yen "has to play a guessing game with the big player." And who covers the bill if it goes wrong? "The American people pay the bill." He needled the timing, too: Bessent "did it late on a Friday… wait till the markets close on Friday and then leak the information out."

Take Hedgeye's tone with a grain of salt, it's an opinionated shop and the delivery is combative. But Hanke is a serious monetary economist, and "maybe the whole diagnosis is backwards" is exactly the kind of idea worth hearing in a week when everyone agrees on the same story.

What the currency desks actually think, and it's not doom

Step away from the punditry and listen to the people who trade currencies for a living, and the picture is calmer and more split than the headlines suggest.

The clearest read came from JPMorgan's own podcast, At Any Rate (Jul 31). FX strategist Pat Locke called last Wednesday's dollar drop "a material setback for the dollar. It's not the end of… the dollar up view that we have at this point, but again, it was a tactical setback." He explained the mechanics of why the dollar fell in a way that's genuinely useful: the bond market did a "twist," where short-term yields fell and long-term yields rose, and historically that particular combination, "short end lower, back end higher", "is quite dollar negative." The last time he'd seen that pattern was "the middle of last year when… there were rumors that Fed Chair Powell at the time might lose his job." In other words, the dollar sold off the way it does when people doubt the Fed, not the way it does in a genuine growth scare.

Crucially, Locke listed the reasons the dollar shouldn't just keep sliding: September is "live" for a rate hike, the actual repricing of short-term rates "was not all that dramatic" so the dollar "didn't actually lose that much relative advantage," the underlying carry trade "support that we've been talking about for some time" is intact, jobs data has been coming in "pretty well," and "Iran very much unresolved. Brent back at 90 bucks" gives the dollar a safe-haven bid. His team is sticking with a "pro-carry orientation", hardly a capitulation.

His Tokyo colleague Junya Tanase added a detail that undercuts the "endless intervention" fear: Japan has now spent an estimated ¥18-19 trillion propping up the yen this year, already more than the ¥15 trillion it burned in all of 2024, leaving perhaps only "5 to 6 trillion yen" of "dry powder." That's why officials keep dropping hints about a different lever, leaning on Japan's giant public pension fund (GPIF) to buy home assets, because "the limits of FX intervention become clearer." Tanase's bottom line: none of this "could change… the structural long-term yen weakness."

One irony worth flagging: on that same July 31 podcast, Tanase judged full US-Japan coordinated intervention "highly unlikely," because historically it only happens in a crisis and "Japan's current situation is difficult to characterize as a crisis." Two days later, the US did exactly that. Even the best desks were surprised by how far Washington was willing to go, which tells you how unusual last week really was.

Deutsche Bank's Malika Sacheva, on Bloomberg Surveillance (Jul 31), offered the most thought-provoking dollar idea of the week: the dollar has quietly become a stock-market trade. "We are seeing… a swap from a lot of interest in US Treasuries to a lot of foreign interest in US equities," she said, and that flood of money into American stocks "has actually provided a good amount of support for the dollar." The twist: that changes the dollar's character. "In the next big equity correction, it's not necessary that the dollar will necessarily do well because the dollar is now much more linked to and much more sensitive to equity capital than it has been in the past." And she argued the dollar's fate over the next year "is not really about what happens to the euro or… sterling. It's what happens to currencies in Asia. It's what the BOJ does… whether we see repatriation from Japanese investors back into Japan."

And on Bloomberg Surveillance (Jul 30), Point72's Sophia Drossos gave the measured buy-side view: yes, "the dollar is going to lose a little bit of interest rate support," because the market now doubts the Fed will keep raising rates. But she was careful not to make it a US-only story: the European Central Bank "declined to hike," the Bank of England "held rates," so "this is a broader trend among central banks now." When everyone eases together, the dollar doesn't necessarily fall against everyone, it's the relative moves that matter.

Washington's own version, and the independence question that won't go away

The most direct insider voice of the week came from the administration itself. On Bloomberg Talks (Jul 30), White House National Economic Council director Kevin Hassett, as close to a policymaker as this week's podcasts got, declared "full confidence" in Warsh. Pushed on the 30-year yield closing at its highest since 2007, he brushed it off as "a natural transition time where a new leader comes in and tries to get the House in order," and argued the July inflation data (a rare negative headline reading) is "taking the pressure off the Fed." His defense of Warsh's method: the old Fed relied on "outmoded science regarding the Phillips curve," and Warsh has "brought in a brain trust… like Karen Dynan at Harvard" to build "a new, improved, and much better reaction function." Asked whether Warsh is a hawk or a dove, Hassett said: "I think he's a realist. But he's really serious about getting inflation back to its target." And he insisted the chair "will be independent."

That word, independent, is exactly where the market's doubt lives, and it's worth airing the other side. On the same Bloomberg Surveillance (Jul 30) that carried Drossos, Principal's Seema Shah put it politely but pointedly: a few weeks ago "the market had finally started to discard this idea that Chair Warsh was going to be the mouthpiece for President Trump," but after the confusing press conference "those question marks are back… Does Chair Warsh want to keep rates unchanged because that's President Trump's perspective? I think there is a question." Her call: "it's now up to the central bank to really come out and reaffirm that commitment." That is the deeper anxiety under a soft dollar, not the level of rates, but whether the world still trusts who's setting them.

Why this reaches your wallet, the plain-English version

If you want the cleanest explainer of the whole saga, the BBC's Business Daily (Aug 5) did it well. Host Mariko Oi, self-described "BBC's Japanese Yen Geek," who has covered the currency for 21 years, explained that coordinated US-Japan intervention is genuinely once-a-generation: the last time was 2011 (after Japan's earthquake), and before that 1998. This time the yen was so weak, as low as 164 to the dollar, back to about 157 after the rescue, that the US stepped in to help prop it up, partly by buying yen with euros and partly by letting Japan temporarily swap US government bonds for dollars rather than dump them. She also relayed why the yen is chronically weak in the first place, decades of near-zero interest rates and stagnant wages after Japan's 1990s property bust, and why a new prime minister who wants to cut taxes and spend more (and calls raising rates "stupid") is pushing it weaker still. President Trump's own framing, in her clip: "They have a weakening yen and they wanted a little bit of help. And we're always there for Japan."

The reason any American should care runs through the bond market, and two voices sharpened that this week. On Thoughtful Money (Aug 5), strategist Stephanie Pomboy argued that "rising yields are the greatest threat markets face today," and that Japan defending its currency by selling US Treasuries is "a destabilizing factor" pushing US long-term yields higher no matter what the Fed does. On Wealthion (Aug 4), independent analyst Jesse Felder made the case that the 10-year Treasury yield "is the most important chart" right now, with the economy growing above 7% in cash terms and a classic rule of thumb (the Taylor rule) implying rates "should be above 6%" versus today's 3.5-3.75%, he thinks long yields are breaking higher on lost faith in the Fed, compounded by Japan's Treasury selling. Both are independent commentators with a bearish lean, so weigh them as views, but the mechanism they describe is the real link between a Tokyo currency drama and an American mortgage rate.

The debate

Is the dollar actually breaking, or just wobbling? This is the live fight now that the bears have opposition.

The dollar-is-rolling-over case (Drossos, Sacheva, the Real Vision nowcast): The Fed has lost some of its rate advantage and the market is extrapolating that forward; Deutsche Bank warns the dollar is now hostage to the stock market and vulnerable in an equity sell-off; and on Real Vision (Aug 3), the Macro Mondays team said "everything that we see in our nowcasting right now suggests that the dollar has more weakness coming up," driven by softening US inflation.

The it's-just-a-wobble case (JPMorgan, Vermeulen): JPMorgan calls it "a tactical setback," not a trend change, carry support intact, September live, oil giving the dollar a safe-haven bid. Vermeulen's chart says the dollar bottomed in January and is in a young bull market. Same soft dollar, opposite conclusions.

The tell: tomorrow's jobs number, and whether the dollar index can climb back above 100. Below 100 and sliding says the bears are right; a firm reclaim of 100 says JPMorgan and Vermeulen are.

Is Japan too loose, or too tight? The whole week, and this newsletter, has leaned on the "loose BOJ, 275-basis-point gap" story. Steve Hanke's claim that Japan is actually running tight money (2.2% money-supply growth versus a needed 6%) is the minority view, but it's a clean one, and it matters: if he's right, the cure isn't just a rate hike, it's faster money growth, and the yen stays structurally weak until that changes. Note that even the mainstream desks (JPMorgan's Tanase) agree on the punchline, "structural long-term yen weakness", they just get there by a different road.

Is Warsh's silence strategy or blunder? Still the central fight, and this week it kept maturing. The defense picked up serious names, Apollo's Slok ("more optionality"), Guggenheim's Anne Bryant, who on Guggenheim Macro Markets (Aug 5) called the approach "credible long-term" even as long yields jumped about 20 basis points, and the White House's Hassett. The skeptics still have the price action on their side: the highest 30-year yields since 2007 and a market that, per Seema Shah, is back to questioning the Fed's independence.

The trades in play

Only where the podcasts named an actual expression:

Stay long the dollar / pro-carry (JPMorgan). On At Any Rate (Jul 31), JPMorgan's desk kept its "pro-carry orientation" and its "dollar up view," treating last week's drop as a tactical setback with several offsets (live September, intact carry, oil safe-haven bid) working against further weakness.
Fade the dollar in an equity wobble (Deutsche Bank). Sacheva's framing on Bloomberg Surveillance (Jul 31): because the dollar now rides on foreign buying of US stocks, "the next big equity correction" is where the dollar becomes vulnerable, watch the stock-dollar correlation, not just rate differentials.
Own downside protection on US stocks (Apollo's Slok). On Brew Markets (Aug 5), Slok's three-risk stack (oil into the midterms, a slower AI payoff, a Fed not done hiking) led him to conclude "the downside risks to the S&P 500 are bigger than the upside risks."
Long the dollar via the chart, sideways for now (Vermeulen). On Sprott Money News (Aug 5), the technical call is dollar holds 99, drifts sideways one-to-two months, then breaks higher when equities stall, with precious metals capped as long as the dollar firms.

Read-throughs

Tomorrow's jobs report (Aug 7) is the judge. With no Fed guidance to lean on, a payrolls print near or above 100,000, versus June's 57,000, revives the September-hike case and would put a floor under the dollar; a soft number keeps the Fed on hold and the dollar heavy, per LPL Research (Aug 4). Everything above is a bet on this number.

Watch Japan's ammunition, not just the intervention. JPMorgan reckons Japan has only about ¥5-6 trillion of intervention firepower left after already outspending all of 2024, which is why officials keep floating the giant public pension fund as the next lever. The intervention buys time; only a Bank of Japan rate hike changes the underlying math, on At Any Rate (Jul 31).

Watch the long end of the bond market, the real transmission belt. Whether 30-year yields stabilize or keep grinding toward the mid-5s is the single cleanest tell in markets, and it's the channel through which a Tokyo currency fight and a silent Fed reach American mortgage rates, per Thoughtful Money (Aug 5) and Wealthion (Aug 4).

Watch the stock-dollar link. Deutsche Bank's point that the dollar now leans on foreign stock buying means an equity pullback could hit the dollar harder than a rate move would, a correlation that has been quietly changing, on Bloomberg Surveillance (Jul 31).

Watch the calendar on the first rate hike. On Barron's Live (Aug 3), the base case was Warsh holding through year-end with a first hike more likely in December than September, a reminder that "the Fed is under pressure to act" and "the Fed acts next month" are not the same thing.

What changed this week

The one-sided story got a genuine other side. After a week of dollar-doom, real weight lined up against it: Apollo's Slok reframing the Fed's silence as optionality, a technical analyst arguing the dollar already bottomed, and Steve Hanke arguing the entire "loose Japan" premise is wrong.
The FX desks clarified the read: less alarm than the headlines. JPMorgan called the dollar drop "a tactical setback," not a regime change, and kept its dollar-up, pro-carry view; Deutsche Bank reframed the dollar as an equity-flow trade rather than a pure rate trade.
Even the pros were caught out by Washington. JPMorgan's Tokyo strategist judged coordinated US-Japan intervention "highly unlikely" on July 31, and it happened within days, underscoring how far the Treasury was willing to go and how unusual the week was.
The independence question moved back to center stage. The White House (Hassett) leaned hard into "he will be independent," precisely as market strategists (Seema Shah) said the worry that Warsh is keeping rates unchanged "because that's President Trump's perspective" had returned.

Levels referenced are approximate, from the late-July and early-August US sessions: dollar index sitting just under 100 (around 99-100, unable to decisively reclaim it); dollar-yen around 157 after the rescue, from roughly 164 at the lows; Bank of Japan policy rate about 1%; the US-Japan rate gap about 275 basis points; 30-year US Treasury yield around 5.2% (highest since 2007), the 10-year near 4.7%, the 2-year near 4.2-4.3%; Japan's estimated intervention this year roughly ¥18-19 trillion; Brent crude near $90 on unresolved Iran risk; June US payrolls 57,000, with tomorrow's July report the key swing.