The US dollar could remain strong In the short-term, according to analysts at Wells Fargo. On a longer perspective, they warn that with foreign central banks already active, and the Federal Reserve still relatively dovish, these divergences in monetary policy should place pressure on the US dollar.

Key Quotes: 

“Our 2021 global GDP forecast has been revised lower, and we now expect the global economy to grow 6.1%. The majority of the downward revision comes from a slightly less optimistic growth outlook in the United States; however, due to a renewed spread of COVID and harsh restrictions, we have once again lowered our 2021 GDP forecast for China. In addition, new restrictions have complicated the growth outlook for Australia, while we have become modestly more constructive on the Eurozone as leading indicators continue to suggest a more robust economic recovery.”

“Risks around our global growth outlook are tilted to the downside. COVID cases continue to rise, fueled by the spread of the Delta variant, which could result in disruptions to the global recovery. While we do not expect widespread lockdowns to be reimposed, we do have concerns that consumer behavior and spending patterns may be altered amid the rise in virus cases.”

“The U.S. dollar has rallied in recent weeks, and in our view, we believe dollar strength can continue in the short-term. A bounce in U.S. Treasury yields has supported the dollar, while the greenback may also be attracting safe haven flows given the rise in COVID cases. Over the longer-term, we maintain our view for U.S. dollar weakness as foreign central banks are likely to continue tightening monetary policy at a quicker pace than the Fed.”

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.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD clings to modest gains above 1.0550 ahead of US data

EUR/USD clings to modest gains above 1.0550 ahead of US data

EUR/USD managed to regain its traction and turned positive on the day above 1.0550. The data from the Eurozone showed that Sentix Investor Confidence improved to -21 in December from -30.9 in November. Investors await ISM Services PMI data from the US.

EUR/USD News

GBP/USD stays below 1.2300 as US Dollar holds steady

GBP/USD stays below 1.2300 as US Dollar holds steady

GBP/USD has lost its bullish momentum and gone into a consolidation phase at around 1.2300. Ahead of the ISM Services PMI data from the US, the cautious market mood helps the US Dollar limit its losses and doesn't allow the pair to turn north.

GBPUSD News

Gold loses traction, trades below $1,800

Gold loses traction, trades below $1,800

Gold price has reversed its direction and declined below $1,800 after having touched a fresh multi-month high of $1,810 during the Asian trading hours. The 10-year US T-bond yield clings to modest gains above 3.5% ahead of US data, weighing on XAU/USD.

Gold News

Ethereum price pops as this week could be the most profitable one of the year

Ethereum price pops as this week could be the most profitable one of the year

Ethereum (ETH) is booking over 1% of gains this morning, which as such is not that uncommon. What is rather important is that Ethereum price is moving away from the bottom of 2022.

Read more

TSLA sinks after automaker cuts Shanghai production

TSLA sinks after automaker cuts Shanghai production

Tesla (TSLA) stock gave up 4.7% in Monday's premarket after Bloomberg reported that its Shanghai factory would trim record production by 20% due to sluggish Chinese demand.

Read more

Forex MAJORS

Cryptocurrencies

Signatures