Analysts at MUFG Bank see the US dollar remains in range. They warn that the fiscal burden of the US could be a negative factor for the greenback in the future as the deficit reached 11.8% in GDP terms and is estimated to climb to 18.7% in 2020.
Key Quotes:
“Last week we decided to tone down our short-term USD bullish view given the remarkable ability of the markets to ignore the numerous short-term risk factors. That ability is still evident although the US dollar has strengthened this week and the S&P 500 is 1.4% lower as those downside near-term risks get a bit more attention. NOK and AUD are the two worst performing G10 currencies this week while JPY and CHF are the two best performing – a classic risk-off type performance mix. With President Trump back on the road this week, the gap in the polls has narrowed a bit – 5 days ago Biden’s lead was 10.3ppts according to Real Clear Politics and today the lead has narrowed to 9.4ppts.”
“The IMF estimates that the Fed purchased 57% of debt issued since February. That may well have to increase going into next year with the debt outlook worsening at a time when inflation will be picking up. Our US Rates analyst forecasts the core PCE annual rate picking up to 2.2% by June. If the Fed commits to capping yields, at least through 2021, the result is likely to be s sharp move higher in inflation expectations.”
“The US dollar is on shaky foundations. Near-term risks are limiting appetite for USD selling now, but that will change, possibly once we are beyond the US election.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.