Stimulus is driving imports higher, and it may matter more for the dollar in this cycle than in the past
There's little surprising in a weak linkage between current account movements and fx movements. One can think of an exchange rate as the relative price of goods or the relative price of assets. FX trades linked directly to trade tiny in relation to overall fx trades. In the case of the USD, 2019 total annual US trade (exports & imports) was about $5.6 trillion. Daily USD fx trades were about $6 trillion. Sure, expectations about trade and factor services flows (the constituents of the current account) can affect expected asset price moves, but interest rate differentials, domestic demand, perceptions about relative risk premia that are not chiefly determined by trade, especially in large, relatively closed economies are likely to play a critical role in exchange rate movements.
Lastly, how would you explain the evolution of the US current account in terms of national savings and investment trends given that the current account is just the gap between national savings and investment? A relative rise in US consumers' spending out of income coupled with a further deterioration in government savings (a higher fiscal deficit)? A surge in investment?
What are your findings for EM current accounts?