‘No. 1’ thing preventing a dollar comeback is the virus surge, currency strategist says

It may take months for the dollar to stage a comeback.

Brown Brothers Harriman’s Win Thin warns it will continue to weaken due to the surge in coronavirus cases.

“What I’m focused on near-term is really the virus numbers and the resulting slowdown here in the U.S. in Q4 and parts of Q1,” the firm’s global head of currency strategy told CNBC’s “Trading Nation” on Monday. “No. 1, we have to control the virus.”

According to Thin, the greenback will likely slide another 4% to 5% from current levels. Since the March 23 stock market low, the U.S. Dollar Index has shed 10% of its value. Even with Monday’s gain, it’s still near three-month lows.

“If Mr. Biden can come in [and] set a strong precedent for some kind of national strategy on controlling the virus and get some stimulus passed, then I think there’s scope for the dollar to bottom in Q1,” said Thin.

Two months ago on “Trading Nation,” he warned the dollar index would test February 2018 lows. Thin, who first became bearish on the greenback in April, cited growing risks associated with a second virus wave and the government’s stimulus stalemate.

Despite his bearishness, Thin believes the weakness is temporary.

“It’s a cyclical downturn,” he added. “There are a lot of pundits out there calling for a structural decline in the dollar. I don’t think we’re there yet.”

Thin expects vaccines will ultimately give the U.S. the ability to control the pandemic. His base case is the economic recovery mimics what’s underway in Asia.

“The greater China area is doing very well. They’re showing the world really how to control the virus,” Thin said. “Obviously, we’re having trouble with it here.”


Products You May Like

Articles You May Like

As Biden takes office, China again calls for relations with the U.S. to ‘return to the right track’
Someone hit the $731.1 million Powerball jackpot. Here are mistakes for the winner to avoid
Intel says an earnings slide may have leaked early, which is why it released results before close
Still no stimulus check? Biden executive order aims to speed up payments for 8 million people
Existing home sales in 2020 hit highest point since 2006, but listings are at a record low

Leave a Reply

Your email address will not be published. Required fields are marked *