Send me real-time posts from this site at my email
Macro Charts

The US dollar is still king

The Corona virus and continued weak Chinese figures will likely keep USD/CNY elevated until sometime during Q2

This is generally good news for long USD positions against EUR, AUD, GBP (etc) as well. We see a strong USD against most currencies in our forecast until at least mid-year. The coronavirus more of an issue for the EUR than the USD given that the EUR is closer linked to world trade.

The virus also increases the risk of a trade war 2.0 (since China simply cannot comply with the deal due to current shutdown), which we decide to reflect in 2021 forecasts through a lower EUR/USD forecast than seen earlier.

Our main market take away is that the US outperformance narrative will likely stay intact, since e.g. Germany is relatively worse off than US due to the Chinese close-down. This also leaves us in the upper part of the USD smile during Q1 and into Q2. This means USD stronger for longer.

We adjust also GBP in a slightly stronger direction as the political instability around the Brexit 2.0 negotiation is not a market theme short-term. Wuhan/China is more important negative news for EUR than GBP.

CHF will also remain stronger as the SNB struggles to fight against the strength since they have been labeled a currency manipulator by the US.

We will stay in the upper part of the USD smile for the time being

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue