The downtrend of the US dollar has shown renewed vigor this month with the index of the US dollar index (DXY) breaking from last month’s 92.5-94.0 range to test 91.0, currently 90.8.
Westpac economists have scaled up the USD downtrend from a further 2% to around 5%, as the effect of vaccines and the policy instance advocate a sustained depreciation of the USD, as does the pursuit of investor performance.
Key statements:
“This decisive scientific success will accelerate the elimination of downside risks, particularly in Europe and the United States, and will also improve the likely scale of recovery around the world.”
“Therefore, short, medium and long-term interest rates will remain at historically low levels as far as the eye can see. If we add the extraordinary level of liquidity that central banks offer globally, the foundation is laid for a strong investment in financial and real assets. “
“As the opening of the global economy erases concerns about downside risks, investors will seek new profit opportunities. Many will be outside the United States and Europe. This is also the case for real assets, with the level and speed of development in Asia and emerging markets much more conducive to long-term investment. “
“Therefore, both financially and in real investment, we see a strong justification for extending the expected fall in the US dollar index from a further 2% to almost 5%. This revised forecast will see the DXY index drop to around 86.8 in mid-2022. “
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