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USD: 3 Key Factors To Determine The Path Of USD Weakness – Danske

The US dollar has been under pressure from the major currencies. What is the outlook for the currency over coming months?

Here is their view, courtesy of eFXdata:

Danske Research highlights 3 key factors which will likely set the path for the USD weakness over the coming months.

“Fed sets the broad USD path – but post-US election surprises remain on our radar:

1- If the Fed fails to win credibility in its shift to FAIT, broad USD weakness could prove short-lived; this goes especially if the global recovery stalls into 2021.

2- If the Fed backs its regime shift with weighty action (QE boost or, even, negative rates), USD weakness could accelerate swiftly  and extend into 2021.

3-  In our base case, the US election should not be instrumental for currencies, but  if a Biden win fuels a backlash on the tech sector, reconciling trade rhetoric, and/or marked higher US corporate taxes, USD weakness could be prolonged,” Danske notes.

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Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.