The beginning of the end of the Dollar's rally – SocGen

The US Dollar is stronger across the board. Kit Juckes, Chief Global FX Strategist at Société Générale, believes that growth expectations will be a big driver for the greenback and less dollar-friendly.

Drivers of economic out-performance are fading

“The US growth outlook matters more for the dollar going forwards, than where US bond yields go next. So far, US rates have risen further and faster than elsewhere, on the back of economic out-performance. A fiscally fuelled reopening saw the US outperform and both geography (far from Kyiv) and being the world’s second-largest energy producer provided a cushion as others were hit by surging gas prices.” 

“But the drivers of economic out-performance are fading. That means we are close to the end of the Dollar’s long rally and moving to a phase of trendless trading, which is likely to last for some time, before other economies’ economic prospects improve, at which point the Dollar will start to fall back.”