The US Dollar has been under pressure recently. Has it peaked? Where will it go next?
Here is their view, courtesy of eFXdata:
NAB Research discusses the USD outlook and maintains a structural bearish bias through 2019.
“When we think about the USD’s medium-term trajectory, our view is conditioned by both valuation and structural considerations. In the case of the latter, issues such as rising ‘twin deficits’ and the related rise in the US debt trajectory are deemed important. In the case of valuations, the likes of PPP metrics count for something; put differently, the USD real effective exchange rate relative to history points to overvaluation of at least 10%,” NAB notes.
“Revised Fed expectations since mid-December suggest that the USD will now struggle to exceed 2018 peaks, one caveat would be a return to extreme risk aversion. We are USD bears for 2019 but the H2 2018 ranges for USD indices are seen holding through much of H1 at least,” NAB adds.
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