U.S. dollar could soon wipe out all of its post-pandemic gains, Soc Gen strategist warns The slide in the U.S. dollar in the last eight months could mean that mean all of its gains in the wake of the coronavirus pandemic will soon be lost, according to Kit Juckes, a macro strategist at Société Générale who has been a long-time currency analyst.
Juckes said in a note shared with SocGen clients and the media on Tuesday that he expects the greenback could return to its lows from December 2020, the level it fell to during the pandemic given the market is pricing in an end to interest rate rises by the Federal Reserve this year.
“As was the case in January/February before the SVB mini crisis, the market is anticipating the peak in US rates and a further narrowing relative rates. If nothing happens to scupper those expectations (another upside surprise in US growth, or further European growth disappointment) I would expect the Dollar Index to move closer but not all the way to, the lows at the end of 2020,” he said.
“That won’t happen in a straight line and will require further interest rate convergence between the U.S. and other major economies, however.”
Over the past week, investors’ expectations about the outlook for where U.S. interest rates are headed have shifted. Following lower-than-expected readings last week on U.S. June inflation, as measured by the consumer price index and the producer price index, many investors expect the Fed will raise its benchmark interest rate only once more when the central bank holds its policy meeting next week. ...............
https://www.marketwatch.com/story/u-s-dollar-could-soon-wipe-out-all-of-its-post-pandemic-gains-soc-gen-strategist-warns-4c559410?mod=home-page
