Economists at Capital Economics think that the US will return to a more traditional approach to the greenback under Joe Biden and anticipate that the overall effect of his economic policies will favour a weaker dollar.
Key quotes
“If the Biden administration were successful in its ambition to reduce FX intervention, the result probably would be to weaken the dollar, by limiting demand from the foreign official sector. So even if it is expressed in different terms, Biden’s preference, like Trump’s, appears to be for a weaker dollar.”
“The more important factors for how the dollar fares under Biden will probably be his fiscal policy, and how the Fed responds to it. Our view is that both US fiscal and monetary policy will remain accommodative over the next couple of years – an overall policy stance similar to that in the immediate post-GFC years, as well as in the early 2000s. Just as it did on those occasions, we think that this policy mix will result in a weaker dollar.”
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