The US fiscal gap or budget deficit as a percentage of gross domestic product is expected to hit 18% in 2020, a level not seen in the past 75 years, as noted by Jeroen Blokland, Portfolio Manager at the Robeco Multi-Asset funds.
The budget deficit is expected to balloon due to the passage of the record setting CARES Act, the first trillion-dollar stimulus package. Further, the Republicans and Democrats are negotiating another coronavirus stimulus package. In addition, the US is running a current account deficit.
As such, a majority of analysts are bearish on the US dollar. In the past, changes in the twin deficits have been a good predictor of the long-term trend in the value of the US dollar.
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