The current risk rally seems to rest on thin fundamentals and with the continued improvement of US financial conditions (Bloomberg), together with increasing chances of more aggressive Fed rate hikes, it should be the combination of higher rates and the higher USD undermining equities at one point. So far, the equity rally shows signs of further short-term strength. For instance, cyclical and financials are leading the rally, which is exactly what equity bulls want to see. The higher equity market allows real rates to move higher too supported by rising nominal rates outpacing the more moderate increase of inflation expectations. Cash strapped Venezuela has been monetising some of its gold reserves to get hold of urgently required USDs. Simultaneously, gold is breaking lower. The rising S&P 500/gold ratio could be easily read as an additional sign of markets endorsing the Fed hiking rates. All this leaves the door wide open for further USD gains.Price action shows us spots of USD strength, especially against commodities and commodity currencies however overall outlook remains complicated as JPY, CHF and GBP are largely trading sideways. Emerging markets remain weak as politics and weak commodities are not helping, BRL and TRY remain politically troubled and MXN has been losing ground along with Latam.