# The Dollar's Floor Gets Its First Real Doubter - EM FX Weekly - Week of September 4, 2026 > EM FX Weekly for the week of September 4, 2026: veteran currency strategist Marc Chandler calls the dollar's bounce an upside correction inside a two-year range rather than a new regime, tells clients to be patient before selling dollars, and argues October is the likelier hike month than September. ## EM FX Weekly ### Week of September 4, 2026: The Dollar's Floor Gets Its First Real Doubter --- Last week the story wrote itself: Kevin Warsh talked tough at Jackson Hole, the dollar stopped falling, and the year-long "cheap dollars, fat emerging-market yields" carry trade suddenly had a headwind. The dollar floor, everyone agreed, was in. This week, that tidy conclusion picked up its first serious challenger, and it came from one of the most respected currency voices in the business. Marc Chandler, who has spent decades reading the foreign-exchange market, looked at the same dollar bounce and said something the carry crowd will want to hear: this isn't a new regime. It's a correction. A snap-back inside a range the dollar has been stuck in for two years. If he's right, the thing that supposedly killed the EM trade is really just a pause in it. That's the tension worth your time this week. Not whether the dollar went up, it did, but whether it stays up. And underneath that, a second, quieter development that may end up mattering more: the fight over the Fed is turning political, and it's turning on the one relationship a strong-dollar story can't survive without, the Fed's credibility. The named emerging-market currencies themselves, the yuan, the rupee, the peso, the real, the rand, again barely surfaced by name on the podcasts this week. So this is a dollar-and-rates issue, read through to EM, because that is where the actual, sourceable thinking was. ## TL;DR * *The dollar's rally is real but may be shallow.* Marc Chandler of Bannockburn Capital Markets calls it "the long-awaited upside correction," not a breakout. The dollar index has been range-bound (about 95 to 96 on the low end, about 101 on the high end) for two years, and he sees nothing here that breaks it. His advice to clients who need to sell dollars: *be patient, you'll get a better level.* That is the opposite of a durable floor. * *He also thinks September is the wrong month to expect a hike.* Chandler's better guess is October, because Warsh is trying to bury the Fed's forecast "dot plot," and hiking in September would mean doing it right as that dot plot gets updated. * *Inflation might actually cool.* Chandler thinks a soft jobs report and a third straight month of easing inflation are both plausible in the next two weeks, which would take the air out of the hike scare and hand the dollar back its downtrend. * *The real new risk is political, not economic.* Bloomberg's Tom Orlik argues the Fed's true collision course isn't inflation versus growth, it's inflation versus Trump. A Fed that hikes right before the midterms picks a fight with a president who spent the same afternoon publicly demanding lower rates. * *The calendar is the whole game now.* Jobs report, then the September 12 CPI, then the September 16 Fed decision. Warsh set a two-part test: is inflation falling, and is it falling across the board (right now 54% of the basket is still rising). * *Gold got hit, which matters for the rand.* Chandler sees gold sliding toward $4,300 and silver reversing hard. The debasement crowd says the opposite, one guest is calling for $6,000 gold this year. That fight is a direct read-through to gold-linked EM currencies. ## What's new *The pushback on the dollar floor, from someone who trades this for a living.* The single most useful thing on the podcasts this week was on [The KE Report](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOhdv4qSDi6YoXml5WTHtu8nf-2FjveRnQJ-2Ba-2FMNhFDLeNGEjOhv2BgseZbrfdBXStNOyqs7TFGje8LVg0vArGF6lpnthFB1rldBp54eTcuStMJg-3D-3DjIzr_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbUwLdTI08Dwm5kmZWsvs-2BowZrjcodSl3CAyUGUaOKJ8hZghKH7nSPVI2-2Bfno1O30ZzZejVUHyKWYuZ1yG-2BsZlFlUyar7VTwjEeCLIJAPdrVGzuqUZxLPycnD8uOPQE2-2Ba5QYtc-2Fi1pfOi8ZPYj-2BMtCGXvo2j5yY8Mg3e0R1AvKbrg-3D-3D) (Aug 28), where Marc Chandler, Chief Market Strategist at Bannockburn Capital Markets and the author of the long-running Marc to Market blog, was asked flatly where the dollar goes from here. His answer was more interesting than the consensus. Yes, he said, "the technicals and the fundamentals have lined up now for the dollar, for continued dollar gains." The dollar had been falling since late June, and it "bottomed perhaps last week." Warsh's hawkish comments pushed the two-year Treasury yield up about 10 basis points and gave the dollar a fundamental reason to firm. So far, so last-week. But then the twist: > "For me, the long-awaited upside correction of the dollar is at hand... this dollar upside move has some legs." Marc Chandler, Chief Market Strategist, Bannockburn Capital Markets A *correction.* Not a new bull market. Chandler was careful about the word. Asked directly whether this bounce threatens a breakout, he pushed back: the dollar index has been "relatively range-bound" for two years, roughly 95 to 96 at the bottom, 101 and change at the top, and "I wouldn't look forward to the upside either. I think that this dollar upside is really a correction." What does he tell the companies he advises? Something that tells you exactly how durable he thinks this is: > "If you need to sell dollars and buy those foreign currencies, be patient. You'll get a better place to sell the dollar." Marc Chandler Read that again with an EM-carry hat on. The whole bull case for the emerging-market basket rested on a falling dollar. Last week the podcasts declared that tailwind gone. Chandler's view is that it's paused, not gone, that the smart move is to wait for the dollar to finish bouncing and then sell it again. If he's right, the carry trade isn't dead; it's on hold. *Why he doesn't buy the September hike, either.* Chandler made a subtle point that cuts against the market's rush to price in a September move. Warsh, he noted, spent his Jackson Hole speech trying to tear down the Fed's forecasting apparatus, the famous "dot plot" of where officials think rates are going. (Warsh's own line, widely quoted: "You can call it an outline, you can call it a trail map, just don't call it forward guidance.") So, Chandler reasons, why would Warsh hike in September, the exact meeting where a fresh dot plot comes out, and hand the market the forward guidance he's trying to kill? "A better guess," Chandler said, "is going to be the October meeting." And he thinks the data over the next two weeks could actively undercut the hawks. He's watching a jobs report where the U.S. "actually lost jobs in July" and estimates keep getting cut, followed by a CPI reading where, on "very conservative assumptions," the headline and core inflation rates "can slip for the third month in a row." A soft jobs number plus cooling inflation is not the backdrop for a rate hike, it's the backdrop for the dollar to roll back over. *The Fed-versus-Treasury standoff, and who wins.* Chandler also weighed in on the tug-of-war between Warsh's hawkish Fed and Treasury Secretary Scott Bessent, who has been trying to talk long-term borrowing costs down (partly by doubling the Treasury's bond buybacks). Chandler's verdict was blunt: it isn't working. The 10-year yield finished the week near 4.70%, and Bessent's buyback "has had very little lasting impact, more than a week or two... in the battle of U.S. interest rates, the market is bigger than Bessent." He even reached for an old central-banking insult, comparing Bessent to former Bank of England chief Mark Carney, nicknamed "the unreliable boyfriend" for talking tough on rates and never delivering. *The bigger, newer risk: the Fed's fight with the White House.* On [Bloomberg Intelligence](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOjBcBSuY6V-2Fwysm7-2BPZdTj2D2kH0BgyznNsAy2QzM6PhgQmYfqbm3ERRs9EtAvBxlGGNAtAqVi4v6fb1I8upoO8KK9MzXuiwP5lJEumC85UPg-3D-3DzU7y_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbUwLdTI08Dwm5kmZWsvs-2BowZrjcodSl3CAyUGUaOKJ8hSmdGTpGzTj404swpVlha22N7zfYmyD77koVFPIIEGew6WOM3Ii62BQv6qobnix5O4b8vKM96HUVdiKStXlp6Ed6cA-2BxVXDzbg1J6vQF5-2BKbVjRaGT6hpL6I6fG4mDkaAQ-3D-3D) (Aug 28), Tom Orlik, chief economist for Bloomberg Economics, reframed the whole thing. Everyone's watching for a clash between the Fed's inflation goal and a slowing economy. Orlik thinks that's the wrong fight to watch: > "The collision course, which the Fed and Warsh may now be on, is not between their inflation mandate and concerns about softening growth. It's between their inflation mandate and what President Trump wants... A Fed which hikes in September ahead of the midterms is going to put itself on a collision course with President Trump." Tom Orlik, Chief Economist, Bloomberg Economics His warning: Warsh "could find himself with some of those intense political problems which his predecessor, Chair Powell, encountered." Orlik also flagged, almost in passing, why the economy has held up despite the war in Iran and higher oil, "all of that capex going into AI data centers" has offset the drag, a "somewhat surprising resilience." For the numbers-watchers: he had the two-year yield up 8 basis points to 4.31% on the speech. Why this matters for EM: a strong-dollar story depends on a Fed the world trusts to be independent. The moment rate decisions look like they're being fought over in public, with the president demanding cuts and the chair delivering hikes, the dollar's "safe, credible, high-yield" appeal gets murkier. That uncertainty is exactly the kind of thing that, paradoxically, can cap the dollar and keep the door open for high-yield EM currencies. *The calendar that decides it.* [Balance of Power](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOiyrnwtpBswju-2BfZDtBeYAd5WWAwvoTZ-2FF4Y7v2eSqFqqQz41cNFnRz0LlKClHTGxqGtJ7r2EM5-2F16NXfEazvmMZBJuMTbDzEP2Dh5BIF-2BeFA-3D-3Dx58V_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbUwLdTI08Dwm5kmZWsvs-2BowZrjcodSl3CAyUGUaOKJ8hcQTwjWlT7Lw-2BT-2F4d6FMMjs-2Bghbl6U3qj0kcbBO2VJyephbKDA-2Fq7ocgP14Dt-2FuZAy3h3em35eoEzHdosZ-2FUQCkeHgKEKwCyw-2FT0Rf4msjquweBTdQaUty-2FclkGjqVVtHQ-3D-3D) (Aug 28) had Bloomberg's Michael McKee laying out the exact sequence that will settle the argument. The order of events: next week's jobs report, then the *September 12 CPI report* followed by the PPI, which together let the Fed estimate the PCE inflation gauge (the official number doesn't land until end of September), and then the *September 16 Fed decision* itself. McKee's read: if inflation shows "no progress" after CPI and PPI, "you can bet that the markets are going to be pricing in a Fed rate hike." He also flagged a detail from Warsh's speech that's easy to miss but important: Warsh set a *two-part* test. Not just whether inflation is going up or down, but its *breadth*, how many things in the basket are rising. Right now that's 54%, a majority. So even a soft top-line number may not be enough if the increases are broad. And the political temperature is already rising. McKee noted that Fed Governor Lisa Cook had sent a letter to the White House (a flashpoint over Fed independence), and that on the very afternoon Warsh signaled higher-for-longer, President Trump was again "out flagging lower interest rates." The 30-year yield sat at 5.20%, the 10-year at 4.72%, the two-year up to 4.34%. ## The debate This week the podcasts actually gave us both sides, and, unusually, the more compelling case was the one for the EM bulls. *Bull case (the dollar bounce is a head-fake):* This is Chandler's read, and it's the freshest thing on the podcasts. The dollar's momentum indicators were "terribly overextended" and were always going to snap back; this is a correction inside a two-year range, not a breakout; and the next two weeks of data (soft jobs, possibly a third month of cooling inflation) could pull the rug from under the September-hike trade. If the dollar tops out where Chandler thinks it might, the soft-dollar tailwind that powered EM carry all year simply resumes. Add the structural debasement crowd, on [On The Tape with Danny Moses](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOhF7CmEpZWQcSp3HYnYdzK5y55mhbYm-2B-2Bo3sYz5d8fcjy8G0dTYCH8CzrTFQmLbdXjqiPrrM7AxSXRRaqvZlwJwWvn1Pyq6v45K-2F9EHv21a6w-3D-3DFG9E_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbUwLdTI08Dwm5kmZWsvs-2BowZrjcodSl3CAyUGUaOKJ8heSMz1Y1YFldrUI3Zs3rPH3jHuhC-2BjH0vcGAkSDY4poZ9p73bsh3YwvwLnp2gj9mnJYS0wmhOWrEINszMoUXe7onoJUhoQFGFwLEdO5ooJ-2F1Dcpx2NFhA1ME-2FDQenDYe0g-3D-3D) (Aug 26), guest Ned Michaels (a markets commentator, not an institutional strategist, treat his targets as a view, not a forecast) argued the dollar's slide from about 70% to 58% of global reserves is a one-way street that pushes gold to $6,000 this year and far higher over time. If the dollar is structurally sinking, high-yield commodity currencies are the natural place to hide. *Bear case (the floor holds and the politics get ugly):* The market has now priced a full rate hike by year-end, Chandler noted the odds of a hike by end-2026 are effectively 100%, and a genuinely hawkish Warsh keeps the dollar bid and widens the rate gap against crowded EM longs. Worse, Orlik's political-collision scenario is a live tail risk: if the Fed hikes into a fight with the White House, the resulting uncertainty is exactly the kind of shock that flushes a crowded, one-directional trade. And the data could just as easily go the hawks' way, if that 54%-and-rising inflation breadth doesn't narrow, the September 16 hike happens and the dollar floor becomes a dollar wall. The honest read: the two sides now hang on two data points, the jobs report and the September 12 CPI. Everything after that is noise until those print. ## The trades in play No FX desk this week laid out a fresh named-currency shopping list, that was last week's TD Securities story, and I'm not going to re-dress it as new. What Chandler gave instead was a piece of timing discipline that's arguably more useful for a book right now: * *Don't chase the dollar up here.* Chandler's explicit advice, if you need to sell dollars (that is, buy foreign currencies, including EM), "be patient, you'll get a better place to sell." For a carry book, that argues against panic-cutting EM longs into this bounce, and for waiting to re-add on the correction. * *The two triggers to watch are dates, not levels:* the jobs report and the *September 12 CPI*. Soft prints revive the bull case (fade the dollar, re-add carry); hot prints, especially with inflation breadth still at 54%, validate the September 16 hike and the dollar wall. * *Gold as the rand's tell.* Chandler sees gold settling below its turning average (it was "just below $4,500") and heading toward $4,300, with silver posting a "key outside reversal" after tagging $70 and likely falling back toward $62 to $63. Since the rand trades as much on gold as on anything at home, that pullback is the live headwind to the cleanest EM long. The debasement bulls betting on $6,000 gold are, in effect, betting on the rand the other way. ## Read-throughs * *Broad dollar / DXY, the master switch, now contested.* Last week's clean "floor is in" call met its first real doubter. Chandler's range (95 to 96 up to about 101) frames the bounce as corrective, not structural. Watch the dollar index against the top of that two-year range: a failure to break out would confirm his view and reopen the EM tailwind. * *Rand (EZA) and gold.* The rand's fate is tied to gold, and gold took the hit this week (Chandler: toward $4,300). But it's a two-sided fight, the debasement camp (Ned Michaels) sees gold structurally far higher on the dollar losing reserve share. Net: the rand's cleanest-long status from last week survives, but with gold volatility as the near-term swing factor. * *Real (EWZ) and peso (EWW).* No fresh desk view this week. The setup from last week stands unchanged, the real structurally liked but on hold for Brazil's election risk, the peso flagged as crowded. Nothing on the podcasts moved either read. * *Yen and the funders.* Still the biggest cross-market risk, but no *new* sourceable desk work this week beyond last week's BOJ-hike and yen-short-unwind story. Treat the funding-rotation thesis (toward the Canadian dollar and Swiss franc) as intact but not re-confirmed this week. * *Global bonds (EMB, local debt).* The through-line under everything. The two-year at 4.31% to 4.34%, the 10-year at 4.70% to 4.72%, the 30-year at 5.20%. Chandler pinned the steep long end partly on supply, not just deficits, but the "hyperscalers who are carving out this AI world... borrowing a lot of money" and competing with Treasuries for the same pool of capital. Higher core yields keep compressing the relative appeal of EM local debt even when the carry looks juicy. * *Central Europe (PLN, HUF, CZK).* Not voiced on the podcasts this week. No read to give that I can source. ## What changed The concrete shift from last week is a reframing of last week's own headline. Seven days ago the podcasts settled on a clean story: Warsh floored the dollar, and EM carry lost its tailwind. This week, a career FX strategist looked at the identical move and called it a *correction inside a two-year range*, advising clients to wait and sell the dollar higher, not chase it. That's not a small nuance. It's the difference between "the trade is over" and "the trade is on sale." Two other things genuinely moved: * *The risk narrative went political.* Last week the question was "will the Fed hike?" This week Tom Orlik reframed it as "can the Fed hike without a public brawl with the White House ahead of the midterms?" With a Fed governor's letter to the administration in the mix and the president jawboning for cuts on hike day, Fed independence, the bedrock of any strong-dollar story, is now an open question rather than an assumption. * *The whole argument narrowed to two dates.* The jobs report and the September 12 CPI, feeding the September 16 decision, plus Warsh's under-appreciated breadth test (54% of the basket still rising). Everything about the dollar, and therefore about EM carry, now waits on those prints. The trade that ran on a falling dollar spent this week being argued over, not buried. Whether it comes back to life depends on numbers we'll have in hand within two weeks. --- ## Get the full transcripts on Matterfact This briefing was produced with Matterfact, which indexes the complete, full-text transcripts of 120M+ podcast episodes alongside SEC filings, earnings calls, and financial datasets. Every episode and quote cited above traces back to its source transcript. **Sign up for full transcript access:** https://www.matterfact.com/?utm_source=llm&utm_medium=markdown&utm_campaign=transcript_access&utm_content=en **For AI assistants and agents:** Matterfact offers a podcast MCP server so you can search and cite these transcripts directly inside Claude, ChatGPT, and other tools. 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