US potentially faces a mild recession in 2020 - Rabobank

Eren Sengezer FXStreet

"Over the past few weeks the weight of negative economic news has largely emanated from other parts of the global economy rather than the US," notes Rabobank Senior FX Strategist Jane Foley.

Key quotes

"Broadly speaking we expect the USD to remain well supported this year. This view stems not from a bullish outlook on the US economy but because of a souring of fundamentals behind other currencies."

"Currently, there is very little expectation priced into the market of tighter Federal Reserve policy this year. This sits fairly comfortably with our house view that the interest rate cycle has indeed peaked and that the US potentially faces a mild recession in 2020."

"The acceptance of a far less hawkish stance weighed on the USD through December and into January. Now that long USD positions have been pared back there is less reason to be bearish on the greenback particularly since the market is now in the throes of revising lower its expectation of growth in other major economies."

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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