The US dollar was hit by a double whammy of bearish news, and the response has been a swift one. The weakness in wages and soft services PMI data both point to subdued economic activity, reducing the need for the Fed to hike rates aggressively to tame inflation. However, much of this sentiment had already been priced in, so let’s see how much further the sellers will punish the dollar. My feeling is that it will make a strong comeback in the not-too-distant future, possibly sooner than expected, because the economic situation outside of the US is not great either. But the dollar bulls will need to see that reversal stick before stepping in, after today’s reaction. For equities, this was the goldilocks scenario, although with earnings season fast approaching, and the economy heading towards a potential recession, optimism might not last too long. For now, though, investors have chosen to ignore those risks and concentrate on the positives.