Home USD: Scope For A Double-Whammy Of Fiscal & Monetary Stimulus; USD Negative Into Year-End – MUFG
Daily Look

USD: Scope For A Double-Whammy Of Fiscal & Monetary Stimulus; USD Negative Into Year-End – MUFG

What is the outlook for the US dollar into the year-end?

Here is their view, courtesy of eFXdata:

MUFG Research  maintains a bearish bias on the USD into the year-end.

“US Treasury Secretary Steve Mnuchin presented a new plan to Nancy Pelosi and Chuck Schumer. The USD 916bn plan includes state and local government aid and liability protection for businesses – the two opposing issues that have blocked progress,” MUFG notes.

“A plan confirmed just ahead of the FOMC on 16th December would be intriguing and potentially set the markets up for a double-whammy of fiscal and monetary stimulus combined.  The FOMC will be under pressure to act given the escalation of COVID and the restrictions that go with it.

A confirmed stimulus plan and the FOMC announcing an increase in purchases of longer-dated UST bonds would in our view be a recipe for the US dollar to weaken into the end of the year,” MUFG adds.

Source:

MUFG RESEARCH/MARKET COMMENTARY

For lots more FX trades from major banks, sign up to eFXplus

By signing up for eFXplus via the link above, you are directly supporting Forex Crunch.

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.