Citigroup expects the US dollar to lose up to 20 percent next year if COVID-19 vaccines become widely available.
The dollar is likely to start declining by up to 20% in 2021 if Covid-19 vaccines are widely distributed and help revive global trade and economic growth, according to Citigroup Inc.
“We believe that vaccine distribution will determine all bearish market signals, allowing the dollar to follow a similar path to the one it went through in the early to mid-2000s” when the currency began to decline for several years, according to Citigroup strategists including books Calvin Tse in a report on Monday.
The Bloomberg dollar index, which is down about 11% from its March peak, came under additional pressure on Monday following news that Moderna Inc. The Covid-19 vaccine has been effective in a clinical trial, affecting demand for havens such as dollars, yen and Treasury bonds..
Strategic analysts assumed for months that the. s. Elections, vaccine breaches, and Federal Reserve policy could deal a serious blow to the currency. The elections were ultimately not the catalyst for a major downturn, but Citigroup says the broad macroeconomic backdrop will be a bigger driver for the dollar’s way forward..
The bank predicts that in addition to the impact of the vaccine breaches, the dollar will suffer as the Fed will remain pessimistic as the global economy returns to normal, and the rest of the world is likely to grow at a faster pace and as investors rotate from the US. s. International assets and assets.
and U should. s. They said the yield curve is steep and with rising inflation expectations, this will motivate investors to hedge currency exposure. “Given this setup, there is a possibility that the dollar’s losses could be loaded in the lead,” with the currency dropping sooner.
Citigroup is more bearish than consensus of strategists who have forecast a weak currency gauge of around 3% through the end of next year. The Bloomberg Dollar scale fell by 1. 8% this month, down from six of the past seven. Monday was down.
Intercontinental Exchange Inc’s largest annual decline. The hugely popular dollar index, DXY, came in 1985, when it was down 18 years. 5%.
Citigroup notes that in 2001, the catalyst that triggered the downward trend of the US dollar for several years was China’s accession to the World Trade Organization. This led to a wave of globalization, which led to an increase in the volume of world trade, leaving behind the closed U. s. An economy that has had a much lower home than global growth.
The strategists said, « There are many reasons to be optimistic » about vaccine developments. The distribution « will trigger the next stage down in the structural downtrend for the dollar that we expect. ».
The positive results of a trial of another COVID-19 vaccine boosted US stocks on Monday as the number of infections soared across the country..
Analysts believe the Biden administration will raise the issue of secularism and minority rights with Modi.
The American pharmaceutical company Moderna has revealed early data that the COVID-19 vaccine is 94. 5% effective.
The eurozone economy jumped by 12. 7 percent on a quarterly basis in the third quarter, but the recovery could be jeopardized by the lockdown.
US Dollar, Citigroup, Vaccine, Dollar, Moderna, Funding
World News – Great Britain – Dollar may fall 20% next year on COVID-19 vaccines: Citigroup
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