Dollar set for more weakness as ‘Brand USA’ falls further out of favour, say analysts

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NEW YORK: Uncertainty of trade, balcutic loans and poor confidence in tolerating US immunity have weighed over US assets, with dollars with an accident. Investors see that the currency is losing its brightness as the greenback returns to the ground with high prices.

This year, the Trump administration’s prices were attracted to investors to the decline in exposure to US assets, after a long performance by Salvo. Although the US currency has stabilized some of the recent sessions when investors have taken peace in the US -China trade war, the rating agency was pressured by Moody’s ancient sovereign credit rating of Moody by a mark.

“There is a lot of scope for further depression, said George Wesi, the lead F. FX and Macro strategist George Wesi, which are from a completely diagnosed point of view.” He said that after Moody’s US credit was reduced, the “sale US” trade focus was returned.

According to CFTC data, the US dollar index has reduced 10.6 percent by 10.6 percent from the height of January, one of the fastest retreat for a three -month period, with speculation leaving $ 20.32 billion, leaving $ 17.32 billion at $ 17.32 billion.

A portion of the dollar has been due to the currency trade on a relatively rich diagnosis-in January, its 20-year-old average on the dollar index is more than 22 %. Currently, the index is shaking about 10 % above its 20 -year average level.

There is room for a significantly weakening, for example another 10 % of the slides will be taken to the bottom of President Donald Trump during the first term.

Long -term concerns

Investors and strategies have seen the dollar as a higher price than years, but betting against currency has repeatedly been painful, as the US economy has shown its power. This may change.

Steve England, head of Global G10FX Research in Standard Chartered in New York, said recent trade arrangements could calm down markets, but they do not pay attention to the long -term confidence facing the United States. “The story of the dollar weakness is not over,” England said.

Investors are also concerned about the long -term financial image for the United States. In the next decade, Trump’s clean tax cut bill will increase the country’s $ 36.2 trillion $ 3 trillion trillion by $ 5 trillion, analysts say.

“The combination of low hunger to buy American assets and the hardness of the US financial process, which is a lot of losers to buy American assets, is the one that is very nervous to the market,” said George Srivilas, the global head of FX Research at Deutsche Bank.

The Trump administration has said it supports a strong dollar policy. “President Trump is clearly clear about keeping the US dollar’s power and power as the world’s reserve currency.

Foreign Holdings

Despite Recent Foreign Selling, Years Of Us Asset Appreciation Mean the World Still Holds Trillions Zero in the Dollar’s Recent Failure To Act As A Haven, Investors said.

“Really, people made a shock … and said,” Well, if the dollar is no longer working as a currency of the air, if it is no longer diversify, what should we do, “said Peter Waselo.

“However, while there is a balance in the departments where people want to reduce the risk,” it has not been sold to the people, yet dollars, assets or equations or treasures have not been sold to return it, “said Colin Graham, head of a multi -estate strategy in Robico in London. He said it could still be followed.

Non -desperate threat

Over the past decade, the dollar had allowed market participants to stop US assets without worrying about currency risk. With the foreign holding of US assets in trillions of dollars, according to banks’ estimates, including Deutsche Bank, even a slight increase in hedge proportion – part of a foreign currency exposure that is safe – can make the magic of important sales.

Asian economies, including China, South Korea, Singapore and Taiwan, have collected large -scale US dollar exhibitions as a result of decades of investment in US assets.

Stephen Jane and Joanna Fareer of the Urozone SLJ Capital said in a note in early May that the Hardings of about $ $ 2.5 trillion by Asian exporters and entrepreneurial investors “are at risk of dollars for these Asian currencies. If economic growth is surprised, it can stop the US Federal Reserve for longer and support the deer.

Brandon Global’s Portfolio Manager Jack Mechanitier noted that American consumers have been flexible so far despite the weakness. Nevertheless, they and others were more inclined to sell rallies in dollars instead of betting on recovering. “The story said,” The story is more of a kind of opportunity to sell dollars on power, “said Machantier.