US Dollar-O-Meter: There’s some 2018 in the air

The dollar-o-meter framework includes growth, inflation, central bank policy, politics, as well as thoughts on the dollar smile. From this update, we see greater upside risks for the dollar than generally appreciated. The consensus trade of a higher EUR/USD in 2021 has so far failed to materialise. Instead, the pair seems to be repeating its usual post-election or post-inauguration patterns and head lower instead. Chart 1: EUR/USD usually drops after Presidential inaugurations chart To see what the future may bring, we revisit our dollar-o-meter framework, which examines the following factors: relative growth, … (full story)

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