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Monday, June 14, 2021

USD: Downside risk to Q2 outlook, upside risks later

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The US dollar is stronger today after the Markit services PMI

Credit Agricole CIB Research discusses the USD
outlook and sees tactical downside risks in Q2 and medium-term upside
risks in H2.

We now see downside risks to our Q2 USD outlook but also
upside risks to our H221 USD outlook as a whole and will be reviewing
our G10 forecasts soon
. In that, we will try to strike a
balance between the positive USD-impact of the tighter US financial
conditions, because of Fed policy normalisation, and the USD-negative
impact of the global cyclical upturn,” CACIB notes. 

“We will also consider the fact that any positive USD returns on the
back of Fed tightening may diminish over time given that the US
exceptionalism could fade as the rest of the world,” CACIB adds.

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