USD: 3 Key Factors To Determine The Path Of USD Weakness
Danske Research highlights 3 key factors which will likely set the path for the USD weakness over the coming months.
"Fed sets the broad USD path - but post-US election surprises remain on our radar:
1- If the Fed fails to win credibility in its shift to FAIT, broad USD weakness could prove short-lived; this goes especially if the global recovery stalls into 2021.
2- If the Fed backs its regime shift with weighty action (QE boost or, even, negative rates), USD weakness could accelerate swiftly and extend into 2021.
3- In our base case, the US election should not be instrumental for currencies, but if a Biden win fuels a backlash on the tech sector, reconciling trade rhetoric, and/or marked higher US corporate taxes, USD weakness could be prolonged," Danske notes.