G10 central banks to inject $2.8 trillion of liquidity in 2021 – Morgan Stanley

Omkar Godbole FXStreet Contributor

Morgan Stanley analysts foresee 2021 as another big year for liquidity injection and asset price inflation.

"On our projections, G10 central banks will inject another US$2.8 trillion of liquidity next year – just in their government bond purchases. That's more than twice the amount of liquidity central banks injected in any year prior to the one drawing to a close," Morgan Stanley analysts said, as noted by Zero Hedge.

As such, the dollar could see a continued sell-off in 2021. The dollar index, which tracks the greenback's value against majors, is currently seen at 90.80, has declined by nearly 6% this year.

"The US dollar has further to fall against a host of G10 and emerging market currencies next year, and the safest investment of all – US Treasuries – will struggle to make ends meet," the investment bank said.

Scarce assets such as gold could also benefit from the massive liquidity injections. The yellow metal rose to a record high of $2,075 in August and was last seen trading near $1,836 per ounce, representing a 21% year-to-date gain.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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