The US Dollar, according to Wells Fargo analysts, could continue strong in the short run due to Federal Reserve policy expectations. They believe the dollar will decline in the medium future.
“Given the Fed’s “hawkish” surprise at its June meeting, we expect the dollar to remain resilient for the time being. However, we still expect the US currency to weaken over time, since numerous G10 central banks are expected to reduce asset purchases and/or hike interest rates ahead of the Federal Reserve.”
“We expect the Bank of England to lower the pace of its bond purchases in Q3 due to the positive overall outlook for the United Kingdom in 2021. The Bank of Canada (further tapering of purchases) and Norway’s central bank are two more central banks where we foresee a shift to less accommodating monetary policy this year (an initial interest rate increase later in 2021). Our forecast for a resumption of U.S. dollar softness in the medium term is also based on the likelihood of greater activity from global central banks.”/n
