The US dollar is on a roll, crushing the yen and the euro. But will this last? Here is the view from Deutsche Bank:
Here is their view, courtesy of eFXnews:
It is possible that a strong USD will be worn by the coming administration as a badge of honor – a signal of global confidence in “Trumpismâ€. Much more likely, because it is more consistent with trade and manufacturing objectives, policymakers will wish to keep USD strength in check. This is unlikely to translate into an overt attempt to drive the USD weaker.
In a world where the US is thinking about pump-priming its full employment economy, the strong USD would need to play a vital role in offsetting inflationary pressures, or the US bond market could go into a tailspin.
Against this backdrop we believe there is likely to be some scope for USD appreciation of at least 5% on a broad TWI.
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