USD sustained weakness beyond 2020 is not on the table – ANZ

The US dollar is in fierce focus as the currency weakens across the G10. The narrative around this trade has been easy to see: low US rates, rising political tension in the US and struggles to form consensus around the next round of much needed fiscal stimulus. Add to this a rollover in the US’s growth pulse as closures hit confidence, and the recipe for weakness is complete. While economists at ANZ Bank agree there is some risk that the USD will weaken a bit more this year, they think talk of its death is premature.

Key quotes

“Many are seeing that the multi-year breakdown in the USD has begun and a longer-term bear market is about to take hold. We are less sure about that but see scope for weakness in the near-term.” 

“The broader secular turn is likely to need more ingredients, a more certain global growth environment, a more viable alternative to the USD as an invoicing currency and a safe asset market that is deeper and more liquid than the treasury market. The latter two conditions are a way off. The US treasury market is larger than all others, with nearly 40% of all debt securities on issue. The EU is a distant second, with just 20% of securities outstanding.” 

“On the demand front, the US consumer market remains globally critical. Together with a deep capital market in which to park profits and working capital and the free convertibility, the USD is likely to remain the invoicing currency of choice for most trades.”

“The growth hurdle, though, is lower. We think the trajectory of global growth will be the strongest driver of the USD in coming months. The question is whether we can trigger a virtuous cycle between the USD and global growth. Over the remainder of 2020, we give this better than even odds, but beyond that, reading this as the beginning of a multi-year depreciation in the USD looks premature given the number of identifiable exogenous shocks that exist.” 

“The pandemic’s impact, the escalation of US-China tensions and the scale of current (unsustainable) fiscal support all challenge this narrative. So we think the road ahead may see some weakness, but it is way too soon to call for the end of the USD’s reign.”


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.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex News

Latest Forex News

Editors’ Picks

AUD/USD weaker ahead of RBA’s monetary policy decision

The Aussie is weak, despite receding dollar’s demand and the robust performance of US indexes. Coronavirus developments hit the commodity-linked currency ahead of the RBA.


Gold: This just might be as good as it gets for gold

The price of gold is trading at $1,975 within a range of between $1,960.54 and $1,986.76 at the time of writing, virtually flat on the day in consolidation having eeked out a fresh all-time high.

Gold News

USD/JPY struggling to retain the 106.00 level

The USD/JPY pair traded as high as 106.46 on Monday but struggles to retain gains above the 106.00 level amid lack of dollar’s demand.


Ethereum on its way to regaining $400 while BNB hit a new high at $22.5

BTC/USD is more stable than other coins right now but has been able to recover from its crash towards $10,500. It is currently trading at $11,369 and faces very little resistance until $14,000.

Read more

WTI drops below $40 on demand worries, OPEC+ output increase

Crude oil prices posted losses last week and seem to be struggling to shake off the bearish pressure on Monday. As of writing, the barrel of West Texas Intermediate (WTI) was trading at $39.85, losing 1.5% on a daily basis.

Oil News