# The Dollar Pauses but Euro Bears Are Not Done - The Dollar Brief - Week of October 7, 2026 > The Dollar Brief for the week of October 7, 2026 (podcasts published October 6): the euro bounced about half a percent to around 1.1265 as the dollar index slipped from a 17-month high near 102, Deutsche Bank says the wind is with short euro toward 1.09, Bank of America ties every 10 basis points of French spread widening to nearly half a percent off the euro, Standard Chartered turns less bearish on the yen, and October Fed hike odds fell to about 24 percent even as the 10-year set a 24-year high above 5.33 percent. ## The Dollar Brief ### Week of October 7, 2026: The Dollar Pauses but Euro Bears Are Not Done --- On Tuesday, the dollar did something it hadn't done in a while. It went down. Not much. The euro bounced about half a percent to roughly 1.1265. The Australian dollar edged up. US 10-year yields slipped four basis points. After a rally that has run almost nonstop since the September Fed meeting, that counts as news. So is this the top? Steven Englander, who runs FX research at Standard Chartered, had the best one-line answer on Tuesday's [Bloomberg Surveillance](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOig6dPvN4XltqkjLsMX0Tkl21-2Fy5ob2oxHmRH9HnoQ7lmXrgTirpRdvq2Fa9gKpZMxvcv4t4QG-2Bhj7MkfbZluW9zuYdNoDO6ltWOVzH3ZankQ-3D-3DmPPa_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbWTewZEp1iWzdau28cbjJ6QVHXsoOYz3Qsn1TilnaVOun0f4xyIGDqb7rR-2Fs-2Fk-2BKCYbHKEbxAmZhBk8hizP3PP7LLLm8F11jVl9-2F-2F4zsSujjdTxL1Sbcku3eWmbTlB-2FSwGSf5IaGV3K811gW-2FwlLOv-2Byjn0YgenKj94c7-2FH-2B2HJFA-3D-3D): "We're all like kids in a sandbox. Like, you know, the dollar goes up half a percent every day. We expect it to go up forever. I mean, that's not the way it works. So a pause is very reasonable, but it doesn't mean it's the end of the rally." That's the theme for today. A breather, not a reversal. The people who trade currencies for a living spent Tuesday arguing that the euro's bounce is a chance to sell it, not a sign Europe is fixed. But one of them also flagged a currency that could quietly change the picture: the Japanese yen. Today matters. The Fed releases the minutes of its September meeting this afternoon, and the Treasury sells new 10-year bonds. Both could decide whether Tuesday's pause becomes a turn. *(Quick glossary. The "dollar index," or DXY, measures the dollar against six major currencies; it is about 60% euro. A "basis point" is one-hundredth of a percentage point. A "spread" is the gap between two countries' borrowing costs; the France to Germany spread shows how much extra France pays to borrow. "Short the euro" means betting it will fall. "FOMC minutes" are the official notes from the Fed's rate-setting meeting, released three weeks later.)* ## TL;DR * *The dollar took a breather Tuesday.* The euro rallied about half a percent to around 1.1265, and the dollar index slipped from its 17-month high near 102. Standard Chartered's Steven Englander: "a pause is very reasonable, but it doesn't mean it's the end of the rally" (Bloomberg Surveillance, Oct 6). * *Euro bears say sell the bounce.* Deutsche Bank's Ozan Tarman: "Most people do see it going to 109 before 115... the wind is with short euro." He added that Deutsche's official forecast of 1.17 is "under strain a little bit" (same episode). * *A rule of thumb for France and the euro.* Bank of America estimates that every 10 basis points of widening in the France to Germany bond spread knocks nearly half a percentage point off the euro against the dollar ([Squawk Box Europe Express](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOgEvZiqBJAm67eJczEWQ1lnzUeu-2BWjfen8r6RxjNLEmz4QMwUDhDTiNhMKVrYPckQaog1vBy414MNR93NZPPpJA4Ij9cs2CArBl76Yn3PpouQ-3D-3DWMwX_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbWTewZEp1iWzdau28cbjJ6QVHXsoOYz3Qsn1TilnaVOusDNXTNdkNtAHmevNHQJIBSdJOPHBXCsxwrrX1evv0dgD7NWYicRxLuUref1c0Qu9-2FpyfekhaAIWLUpi0FnuOTvTxfBy8z0ZbLnxjR1Unn6nCUwlyD2wGFgyWoG9up0vcA-3D-3D), Oct 6). * *The yen may be turning.* Englander says Standard Chartered is "beginning to be a little bit more optimistic that maybe we've seen the top of dollar yen and certainly the top of euro yen," because long-term Japanese yields are now "kind of attractive." * *October hike odds collapsed.* Futures-implied odds of an October Fed hike fell to about 24% from 70% a week earlier, yet the 10-year still set a new 24-year high above 5.33% on Monday ([Schwab Market Update](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOjGGOrG8WpnpRgUdwGc17FVH03BugfTu8ZIWEbIf7gnrd0OQzmJX3aD5Nj3Dws-2FJBqg8rUkJfriradqqcdqt0hR6YbWtdF-2BxRN8H1iSnH7qtg-3D-3DPSwX_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbWTewZEp1iWzdau28cbjJ6QVHXsoOYz3Qsn1TilnaVOugdo4RL7u4JmbW1Ehvr2BiVV-2BRITzzW5ryQwIcunHtAZjo4trP-2BJG4z7gvVO3Lam-2B32QPrK5unqGsxamNHvE6p02Ld4UeD1JRJwl1QSHIdzkIfN2CTcaKagVNYlzZQh2WA-3D-3D), Oct 6). * *Spain now has an election date.* Ozan Tarman pointed to "Spanish early elections on November 29," another political test for the euro. * *The long-run reserve debate keeps running.* Chris Whalen sees the world drifting back to a "pre-World War I" setup with gold as "the chief reserve asset" ([Thoughtful Money](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOiiehQ3X1vwb5Ov35d-2BpbUvaf3JIUwAHcrPhHl031E22ljwgWCQqBvW6UIETpW0nocWY-2FuGHPsRZkwpDjeqoOWixJZLl6i9321237I2tkUjXA-3D-3DPn7R_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbWTewZEp1iWzdau28cbjJ6QVHXsoOYz3Qsn1TilnaVOul6HW-2FlLu3yZV8ClhRuhJx9XPuYQ-2FgpSZN6srWf0hswIt2bKkhWFkmEvpTgofPoM9UEaumCqKwBLNKoI9aQ11of8mF66P-2ByqlhPplVA5NEzR3nbrdxIO8dkWMUcodmCVnw-3D-3D)). Dan Ferris calls de-dollarization talk "baloney," with the dollar still "57% or 58%" of global reserves ([Stansberry Investor Hour](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOhtWRUWw1xa-2F5aRSjqflMClRA5G0zBVurrpmQ5wdF-2BshSTCQOVfzSWb9RoqmaVpH-2FWhj1CW2B9QcAyKu-2FP-2BNrU7EY5OydMj0RgMv08JeXI2UQ-3D-3DnrdK_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbWTewZEp1iWzdau28cbjJ6QVHXsoOYz3Qsn1TilnaVOuvG8Nbwc4eZJcVFbnH-2B-2FE7B5PnelxpYFnt4LVZ0sobzTT0uJYLUCiXlxM-2FZz3V6c7GRNQhn68SlXaRSrHghxYSSVeOPVb3CZtJ-2BycXkPxrFZqTMXc0Yg2zoojZ5Galv4Kw-3D-3D)). ## What's New ### It's Not a Dollar Move, It's a Euro Move Englander's main point on Bloomberg Surveillance is one every dollar watcher should keep in mind this month. "I think that the last week is mostly a euro story. If you take a look at how it's performed relative to other currencies, it's really very weak and, you know, it's not a dollar move, it's a euro move." His explanation for why the euro is so fragile is political, not economic: the market is "seeing that, you know, the middle is shrinking and that's the issue for the euro." He doesn't think the dollar needs record-high yields to keep going. The Bloomberg hosts asked the obvious question. With the 10-year near 5.29% and the 30-year at 5.66%, if yields peak here, does the dollar rally collapse? "Not necessarily," Englander said. Even if bond inflows slow, the US stock market can carry the dollar. Stocks keep hitting records on "a little bit of good news on PCE" and softer jobs data, and "it would be the equity capital flow, the private equity capital flow that we would support the dollar." (For what it's worth, his team still thinks Treasury yields "will go higher.") On Tuesday's euro bounce, he was dry: "It's not the end of France's political issues. It's just, you know, people got tired of selling. But they'll come back." ### Deutsche Bank: The Euro's Bounce Is a Selling Opportunity Ozan Tarman, a senior Deutsche Bank markets executive, was even more direct on the same Bloomberg Surveillance episode. He doesn't think France's problem is contained. "I don't think it's over yet," he said. "We may have more days like last Thursday, Friday... It may spread into European credit. It may spread into European banks... you cannot just get rid of this by putting a plaster on top of it." Keene asked whether a weaker euro is the release valve for Europe's fiscal stress. Tarman agreed that the currency is "the leakage, the valve, if you will, from all this fiscal irresponsibility." Then came the numbers: * *Deutsche's official forecast* (from FX strategist George Saravelos) is still 1.17 for the euro. Tarman: "I think that's under strain a little bit." * *The street's view, as he hears it:* "Most people do see it going to 109 before 115." * *On rescue talk:* even if the European Central Bank uses its bond-buying backstop for countries under attack (the "Transmission Protection Instrument," or TPI), "first, Europe squeezes if it happens tomorrow. But then I think people take that as a selling opportunity." * *His bottom line:* "At the moment, the wind is with short euro." He also flagged a date that hasn't had much attention: "Spanish early elections on November 29." That sits less than four weeks after the US midterms. ### A Useful Rule of Thumb: France's Spread and the Euro CNBC's Ben Boulos put numbers on the French story on [Squawk Box Europe Express](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOgEvZiqBJAm67eJczEWQ1lnzUeu-2BWjfen8r6RxjNLEmz4QMwUDhDTiNhMKVrYPckQaog1vBy414MNR93NZPPpJA4Ij9cs2CArBl76Yn3PpouQ-3D-3DVH7U_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbWTewZEp1iWzdau28cbjJ6QVHXsoOYz3Qsn1TilnaVOus575HZ1DcjG582MVQ-2FXcMBdA4QEYst-2BIpE6oYDrifjnZTu3CqwkeHSIaeH-2BWELAf-2F1uc52fPtK9uz0jTSZQhinUEBIggtnOIxY6qfszbNkJAnm-2BGb4F-2BIiJY4Nu19M4hA-3D-3D) (Oct 6): * France's borrowing costs "now exceed those of Greece." * The French to German spread is at its highest "since the Eurozone debt crisis." * France has "a debt bill of more than a trillion euros coming due by the end of the decade." * The euro is "down nearly 3.5% against the dollar since the beginning of September." The most usable figure: *Bank of America estimates that every 10 basis points of widening in the French bond spread "could push the currency down by nearly half a percentage point against the dollar."* That gives readers a simple tool. Watch the France to Germany spread. If it widens another 20 basis points, BofA's math implies roughly another 1% off the euro. Steve Sedgwick, who covered the 2010 to 2012 European debt crisis, called it "the most foreseeable crisis in history." On CNBC's [Morning Call](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOg30fkRYR7fj9mowhIWDoYhocB53lXHk1KUr-2BrGP-2F0JVJKXAOm9y7u2D8yRkSzsTg2HBen1LREwikiy2Wd8tRwszN-2BGsMcsvy0SorL13dsreA-3D-3DdBK1_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbWTewZEp1iWzdau28cbjJ6QVHXsoOYz3Qsn1TilnaVOup7b8Ts-2FLWBjci3X4cTeTA-2FdjoDRAsgs-2BvZuiqYqAlUe5kdfPUm1oe2W-2BMllHv6PUEAjseIwvouxYTuf0y8jJu22iyYuI1rc6wmhbMnLyhaOWV7MQBjBV-2B3jGgPLPjoNCQ-3D-3D) he explained why: French debt is "circa 119 percent debt to GDP," and "they haven't balanced the books in France since 1974." ### Andy Haldane: Central Banks Will Bend The most important warning of the day came from Andy Haldane, the Bank of England's former chief economist and now president of the British Chambers of Commerce, speaking on Squawk Box Europe Express. "Our inflation is higher and stickier. Our growth is lower and stickier. We have yet to balance the books this century, this century. So history is not on our side." His prediction is about what happens next, and it matters a lot for currencies: "I have a feeling that the governments won't get their deficits down dramatically and that central banks will have to do what they always do, which is be a little bit less independent than perhaps they want to be. And we'll start hearing things about TPI in the Eurozone, anti-fragmentation tools and quantitative easing in the United States or (Warsh) going backwards." In plain English: if bond markets keep punishing governments, he expects central banks, eventually including the Warsh Fed, to step in and buy bonds. That would weaken the currencies involved. For the dollar, that's the scenario that would undo the current rally fastest. ### Le Pen Promises a "Golden Rule" The euro's small bounce came alongside a surprise from French politics. On NAB's [Morning Call](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOjZyLJJLRo06xyp8C2CH6fWCK-2Bsmts-2BujGAD4UXhw5ym5Ju-2FgL1L4X7hLM-2BVN7aHHQIT1oPXpatnWvg6VaWleM5r3gZjPI91y4NOAQfq1YyKQ-3D-3DOoC2_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbWTewZEp1iWzdau28cbjJ6QVHXsoOYz3Qsn1TilnaVOurbrKiahrkIvZX9c5E62WtpNAXo5ShpLOinRVyNifQMKKZ4QSFeS7wYiBOEpM-2BWUegdStl6xIvqKE9AVrXlxEh-2BfV5v-2B6OhsFQhbOaCro5QQj9Wno-2FKmBIYjB-2FD3g-2FZy0A-3D-3D) (in an episode titled "Le Pen Is Mightier Than the Deficit"), the National Australia Bank team noted that Marine Le Pen wrote an opinion piece promising to cut France's debt and deficit. * She pledged a binding "golden rule," shrinking the deficit "by at least half a percentage point of GDP per year until debt falls to 60%." * She wants to cut "140 billion euros in public spending." * The NAB team's caveat: "The specific details of how she'll do this are still sketchy." Their read on why markets cared: "When you've got things blowing out, you want to hear that somebody is putting a stake in the ground and saying, enough." Sedgwick was less charitable on CNBC. He called France's political class "farcical... whether it's Marine Le Pen, Monsieur Macron or Le Cornu... because they are not owning up to the problems." ### The Yen: The Quiet Story That Could Matter Most Here's what I'd flag as the most interesting new idea of the day. It's easy to miss. Englander said Standard Chartered's view on the yen has changed. Normally, when the dollar and US rates go up, the yen should weaken. It hasn't. "It's held in pretty well. We're beginning to be a little bit more optimistic that maybe we've seen the top of dollar yen and certainly the top of euro yen." Why? "For the first time in a couple of generations, in some ways, yen yields, certainly at the long end, are kind of attractive." Japanese investors have spent years sending money abroad in search of yield. If they slow down, "which in many ways is more important than what the policy is," the yen could strengthen. He added: "We were much more bearish on the yen a few months ago." Asked about Treasury Secretary Bessent's claim that the Treasury is "the house" (in charge of markets), Englander was polite but pointed: "there's no point to saying you're the house if you're not the house, because, you know, everybody will know it fast enough." He allowed that Bessent "may have some insight into... shifting BOJ policy." The Bank of Japan sounded "somewhat hawkish at the last meeting." His trade idea, voiced carefully: European currencies look vulnerable against the yen. "Even if it's reversed a quarter, that would be a massive move." For dollar watchers, this matters because the yen is the second-biggest piece of the dollar index. Euro weakness pushes the index up. A turn in the yen would push it the other way. ### October Hike Odds Sank. Yields Didn't Care. Colette O'Claire laid out the odd picture on Tuesday's Schwab Market Update: * Odds of an October Fed hike "sank appreciably to around 24% by late Monday from 70% a week ago, thanks to Friday's soft jobs data and a light August PCE." * Yet yields "only seem to climb," with the 10-year setting "new 24-year highs Monday above 5.33%." * Oil, once the main driver, is losing its grip: "that relationship appears to be decoupling." Crude fell almost 2% Monday. * Treasury auctions: a 3-year note Tuesday and the 10-year today. "A few well-received auctions last month did nothing to slow the yield rally, and a more recent set saw lethargic demand." She also flagged "declining foreign interest in U.S." debt. Her most interesting line was about the dollar itself: "Theoretically, a rising dollar tends to cool yields, so that relationship is worth tracking." A strong dollar makes US bonds more expensive for foreigners to buy unhedged, but it also tightens financial conditions, which slows the economy. The NAB team expects today's minutes to lean tough: "We're going to get the minutes tomorrow, which are going to be, I think, hawkish." They noted that New York Fed President John Williams, despite softer data, still sounded like the Fed is "likely" to "have more tightening to do." ### Are 5% Yields Actually Normal? Jordi Visser, head of AI macro research at 22V Research, offered a useful reframe on CNBC's [Morning Call](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOg30fkRYR7fj9mowhIWDoYhocB53lXHk1KUr-2BrGP-2F0JVJKXAOm9y7u2D8yRkSzsTg2HBen1LREwikiy2Wd8tRwszN-2BGsMcsvy0SorL13dsreA-3D-3DX6ZC_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbWTewZEp1iWzdau28cbjJ6QVHXsoOYz3Qsn1TilnaVOutIQojGkbi3iNQX6CerxEzoPHLDw-2FJP4s-2BLaQk0-2FUG21G0nbvS1XlQnkwYORCSWRkDT1ubaWNcpVMW3slKYu-2FI5Y1975CrfC0l8wGWuJeCUHLsqZ5dTBXxR2EPtBhql0lQ-3D-3D). The surprise isn't that yields are high. It's that anyone is surprised. "Nominal GDP right now, year over year, is 6.3%. The last time we had nominal GDP that high, year over year, was back in 2006 and 2005, which is when rates were up at these levels." ("Nominal GDP" is economic growth including inflation. Over long periods, long-term interest rates tend to track it.) He added that weekly consumer spending data (the Johnson Redbook index) is "also at the highest nominal level since the 2005-2006 period." His conclusion: "the 2009-2020 period was the anomaly. Not now. We're just back." The same episode put the dollar index at "around 102... its highest levels in about 17 months." If Visser is right, it supports the dollar: high US rates aren't a temporary spike but reflect a fast-growing economy that keeps attracting foreign money. On [The Financial Exchange Show](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOj580KJSI-2BaWWmiCvXvvv-2BSd3WEHyPTc38-2BGvVHGhINmY4tQdEY-2BzeDgVnNuJ1aVLtT4eFVDXtT9Th75FKV-2Fpvd42hHj04Ozdm0L18LYN2r4g-3D-3DaeU6_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbWTewZEp1iWzdau28cbjJ6QVHXsoOYz3Qsn1TilnaVOuqsCaJWjEo9qiNvWu-2F35kEjhFdAlGZxYgo-2F2Rn5AeqLdpAOYNdyJ0ClsyBC4421f-2BD8sqDuZucW78tlOBT4GJy-2FwMDBMZjW0Ef04r22-2F5bzsSZTioXkK9WO-2F6eaml93K-2FA-3D-3D), the hosts made a related point about why the Fed may struggle to slow things down. AI builders "don't really care if interest rates are higher or energy prices are higher. They're just going to keep on building." One host's verdict on the next hike: "The 25 basis point hike will almost certainly not make a dent." ### Chris Whalen: Higher for Generations and Gold as the Yardstick *(Commentator view.)* Bank analyst Chris Whalen, chairman of Whalen Global Advisors, gave the most bearish long-run take of the day on Thoughtful Money with Adam Taggart. On rates: "My sense is 10-year treasury keeps going up. I think it could be, you know, five and a half, five and three quarters in the next year." On Trump's complaint that rates are too high: "In point of fact they are as low as we're going to see probably for generations to come." On confidence in US credit, he pointed to a specific signal: "You look at credit default swaps on the United States priced in euro. The spread is widening." (A credit default swap is insurance against a borrower defaulting; a wider spread means that insurance costs more.) On the dollar's long-term role, his thesis is that the world is going "back to a world that's kind of pre-World War I, where gold is the chief reserve asset." His reasoning: * "The reaction to the lack of fiscal discipline in the U.S. and also the sanctions, right, has been a return to a gold standard for reserves." * "Bretton Woods, in effective terms, is dead now." * He expects gold to become "a tier one asset for banks" and "eligible collateral" in currency swaps: "Maybe you'll use gold as collateral for your currency swap when you're paying for your oil." * "The price of gold in the various currencies will be the discipline... it's not so much gold going up as the dollar going down." He isn't calling for the dollar's collapse. Everyone keeps fiat money, he says, but "all of these currencies are going to have to compete with one another, including the dollar." ### The Other Side: It's Baloney *(Commentator view.)* Dan Ferris on Stansberry Investor Hour pushed back on the de-dollarization story, even while telling listeners to own gold: "As long as the US dollar is the global reserve currency, all this crap about the BRICS countries, you know, having their own currency and all this stuff, it's baloney. The US dollar is still 57% or 58% or something of all the foreign exchange reserves in the world. And it's like 80 or 90, you know, 80 or 85% of the transaction volume." He still owns gold, which has "a four handle on it" (around $4,000 an ounce), as protection: "you will want to have owned gold 10, 20, 30 years from now." But he's "happy enough to operate in dollars and own some dollars." That's a sensible way to hold both ideas at once. The dollar's dominance in reserves and payments isn't seriously threatened. Gold is a hedge against slow erosion in what a dollar buys, not a replacement for the dollar. ### Gold Leaving New York, and Tether's T-Bills *(Commentator view; treat the specifics as claims from the show.)* On [Soar Financially](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOi2w8X-2BIyi6cdq0tPa7365p6HwtwHea-2Bjh-2BaeHcgAY-2B3zF4c9cOERLIZyGw9YcOhIZDlitZWAzEyibrmudXRb8Ifd-2FGPNk19N5E0VuHtVUEsQ-3D-3D3KYA_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbWTewZEp1iWzdau28cbjJ6QVHXsoOYz3Qsn1TilnaVOuhpRILnWjfFLn7fkEWb68dmiM50SHyOdotqHCs1eNgNRm-2FVEhMmEiXVNTw08U-2BWhSKH-2B0b-2BTpb0hD8zVidqz1vpqF-2BHJ2oeTy0wnLbCOIlAO-2FO2jCw47f9yzOvnPgECmqg-3D-3D), longtime gold advocate Lynette Zang and her host covered two reserve stories: * *Gold repatriation.* They said France recently brought gold back "from North America," and "the Dutch shipped their gold from New York, from the Federal Reserve... to the Bank of England." The host added that Germany still has roughly half its gold in New York. * *Stablecoins as dollar defense.* Zang argued "it's the stablecoin issuance that is really the attempt to maintain the position of the U.S. dollar." Stablecoins are crypto tokens backed one-for-one by dollars and short-term Treasury bills, so their growth creates demand for US government debt. The host noted that Tether earns "about 5%" on its government bond holdings, keeps that income rather than passing it to holders, and is "also one of the largest holders of gold." * *Washington's next step.* The follow-up crypto bill, the Clarity Act, "was supposed to pass here mid-September and it has stalled." The sticking point they described: banks lobbied against letting stablecoin issuers pay "interest-like rewards" to users. The GENIUS Act, the stablecoin law already on the books, remains in force. ## The Debate: Pause or Peak? *The case that the rally resumes.* * The euro's problems are political and unresolved. "People got tired of selling. But they'll come back" (Englander). * Deutsche's Tarman: "the wind is with short euro," with most people seeing 1.09 "before 115." * Bank of America's math links every 10-basis-point widening in French spreads to about half a percent off the euro. * Even if Treasury yields peak, US stock inflows can support the dollar (Englander). * Spain votes November 29, giving Europe another political hurdle. *The case that this is the peak, or close to it.* * The yen may have bottomed. A stronger yen would pull the dollar index down (Englander). * October hike odds fell from 70% to about 24% in a week (Schwab). If the minutes and CPI confirm a slower Fed, one of the dollar's supports weakens. * Haldane expects central banks, including the Fed, to eventually lean toward bond-buying. That is the scenario that would most quickly undo dollar strength. * Le Pen's "golden rule" pledge, sketchy as it is, gave euro bulls their first piece of good French news in weeks. ## The Trades in Play These are the specific trades named on podcasts this week. None is a recommendation from this newsletter. * *Short the euro on bounces.* Ozan Tarman, Deutsche Bank: "On days like this when euro tries to squeeze, I think people will use that as a selling euro opportunity." Target zone: "109 before 115" (Bloomberg Surveillance). * *Long yen against European currencies.* Steven Englander, Standard Chartered, flagged it as a possibility, not a firm call: if the yen has finished falling, "European currencies are looking vulnerable" (Bloomberg Surveillance). * *Own gold as a long-run hedge, alongside dollars.* Dan Ferris (Stansberry Investor Hour). ## Read-Throughs * *US stocks:* CNBC's Karen Tso noted the split on Squawk Box Europe Express: euro at a 17-month low, "but stateside, Nvidia stock at a record high," with "technology being perhaps a safe haven." Schwab notes FactSet pegs third-quarter S&P 500 earnings growth at 29.5%. * *European banks and credit:* Tarman's warning that France "may spread into European credit... European banks" is the next thing to watch. * *US deficits:* Englander, citing analysis he did with colleague Dan Pan, says a productivity boom helps the deficit "not nearly as much as it did, say, in the late 90s," because growth is concentrated in corporate profits and capital gains, which "do not get taxed very much." That matters for the midterm debate over spending. * *Gold:* The bull case is now about reserves and central-bank behavior (Whalen, Zang), not about the dollar weakening in the short term. ## What Changed * *The dollar's first real pause.* After weeks of steady gains, Tuesday brought a modest pullback. The professionals' consensus: a breather, not a top. * *The yen entered the conversation.* Standard Chartered says it is less bearish on the yen than a few months ago. That is a new risk to the dollar index that wasn't on most people's radar. * *October hike odds are now about 24%,* down from 70% a week earlier, which puts more weight on today's minutes and next week's CPI. * *A new political date for the euro:* Spain's snap election on November 29. ## The Week Ahead * *Today (Wednesday):* FOMC minutes from the September meeting, expected to sound "hawkish" (NAB). The 10-year Treasury auction, a test of foreign demand. * *Later this week:* 30-year Treasury auction. * *October 14:* September CPI, the next big test for the dollar. * *October 28:* FOMC meeting. * *November 3:* US midterm elections. * *November 29:* Spain's early general election. --- ## 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. 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