There’s a lot people scratching their heads at the moment as they seek to understand the key drivers of USD weakness. Dollar strength was a core view for many as the Fed was seen to normalise interest rates in 2018, while some of the other major Central Banks kept rates unchanged. Yet, as analysts such as George Saravelos from Deutsche Bank have been pointing out this week, interest rate differentials have been a poor indicator of dollar direction historically. In today’s note we highlight work from Pi Economics, who lay argue that dollar weakness is due to its integral role in facilitating global leverage expansion. Namely that global investors are adding dollar leverage, which they will have to unwind at some stage. This simultaneously puts downward pressure on the dollar and upward pressure on the S&P and which are ‘simply manifestations of increasing dollar-funded leverage, Pi Economics write. We also look at the US economy with PantheonMacro, who show how strong and sustainable the US economic picture is right now, and how it potentially could be even better. They tell us what we need to be watching out for. As oil continues to push higher, Ned Davis Research provide analysis that indicates that oil market maybe even tighter than the latest figures suggest, while finally we feature two pieces on global trade, one looks at the US politics and the other actual trade data. This is a theme that will need closer attention as the year progresses.