How Central Banks Provide an EM Currency Cushion

The video discusses market expectations for a dollar rally and the potential impact on emerging markets (EM). It highlights the role of the Federal Reserve's actions and the liquidity provided by the ECB and BOJ. The discussion includes the potential cushioning effect on EM currencies due to outflows from the Eurozone and Japan. The video also explores the impact of rising yields and risk-off scenarios on currency pairs, particularly the Australian and New Zealand dollars, suggesting a trade strategy of shorting these currencies against a resurgent US dollar.

What positioning does the market currently have regarding U.S. dollars compared to Australian and New Zealand dollars?

What is the predicted impact on the Australian and New Zealand dollars if the Fed tightens its policies?