A Skidding Dollar?

The US Dollar and the Asian ‘Euro’

 

The US dollar looks set to fall. Our analysis suggests 10-15% is likely, but we cannot rule out a more than 20% slump. The reasons are numerous and include the Fed’s easy monetary policy, the growing ‘twin deficits’ and the rival threat from China/ Asia. But applying Occum’s Razor, the standout risk is the changing direction of ‘safe’ asset flows out of US assets. Foreign investors are starting from huge relative positions in US safe assets built up over the past decade, with foreign issuance stepping up, competition is hot.

 

 

 

See our latest published research, Global View - The US Dollar and the Asian ‘Euro’ - June 2021