Wall Street strategists turn bearish on US dollar, say dramatic falls likely – FT

After the US dollar fell to its lowest in three months against its six major rivals, the Wall Street strategists, including Goldman, JPMorgan, Deutsche Bank and Citigroup, argued in recent days that the currency’s long rally could be finally over, as cited by the Financial Times (FT).

Key quotes

“Several props for the dollar have recently fallen away or begun to wobble.“

“We had been discouraging investors from putting dollar shorts in their portfolios during the past few months because of our concern about the [backdrop], but that has changed.”

“Big economies including China’s had begun to reopen with low infection rates, while the Franco-German proposal for an EU recovery fund had boosted the euro by easing fiscal concerns across Europe.

“We now think it is appropriate for investors to position for dollar downside in their portfolios.”

Brighter sentiment over global growth, as lockdowns were eased, had become a “key driver” of the dollar sell-off.”

“We no longer have the confidence to stand in the way of this optimism and further neutralise our previously defensive trade recommendations.”

“If the global economy really is bottoming out and rebounding again, and US interest rates are at zero and potential growth is lower than emerging markets, we could see the dollar enter into a bear market that could last for five to 10 years.”