USD: Scope For Staging A Rally Into Year-End As Liquidity Impulse Tightens – Nordea

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

Here is their view, courtesy of eFXdata:

Nordea Research flags a scope for USD gains into year-end on the back of tightening USD liquidity impulse.

“Since Mnuchin and the US Treasury prefunded a huge fiscal deal that is likely not going to materialize on this side of the election, the USD liquidity impulse has taken a beating due to Treasury prefunding/cash hoarding ahead of the fiscal deal,” Nordea notes.

“The USD usually regains its footing after a while when the USD liquidity impulse tightens, alongside weaker risk appetite and flatter yield curves. This could be the case over the next 1-2 months before a (much) better 2021 with continued wide scaled QE alongside a fiscal deal that will allow the US Treasury cash account to drop in size,” Nordea adds.

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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.