What is driving what?

Currently many feel a US$ shortage was responsible for pushing the LIBOR-OIS spread up, but it also understood that the US$ follows the LIBOR-OIS spread with an approximate 3 month delay.

It would appear that "a little soon begets a lot"! This is because currency moves are fundamentally destabilizing!

This has caught currency traders off base since they held (and still do) record levels of shorts, fully expecting the US$ to continue falling.

US Dollar COT Large Speculators Sentiment Vs UUP ETF

and a short squeeze has ensued!

The US$ has been relentlessly falling since the Trump Presidential election victory and something may be happening here that is more than an expected short squeeze. It may be a signal that the false synchronized growth narrative is failing and the central banks will soon be forced to pivot! The US appears to be in the best relative shape globally. Markets lead by ~8 months and a recession appears in the cards for later 2019. The central banks therefore would have to be feeling uncomfortable by this fall and the market may be beginning to set up accordingly.