CRU
March 16, 2021
CRU: Dollar Bears Pushed into Hibernation
Written by Ippolito Tarabini
By CRU Economist Ippolito Tarabini and Principal Economist Alex Tuckett, from CRU’s Exchange Rate Outlook Q1 2021
The latest foreign exchange market developments have shown the resilience of the dollar. Since the start of the year, the single most important driver of dollar strength has been U.S. fiscal policy, which has boosted expectations of U.S. growth and interest rates. However, while the stimulus is positive news for the dollar in the short run, the same is not necessarily true for the longer run. We thus maintain our view that the dollar will gently depreciate in the medium term, reflecting persistent twin deficits, modestly higher relative inflation and a more stable international environment.
