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Citi

Currencies: Still Bearish on USD Longer Term

Key takeaways

  • Following the US mid-term elections in November, USD rallied. Democrats taking the majority of the House of Representatives raises the potential of increased political tensions and USD headwinds given potential conflict with a Republican White House and Senate.  
  • Growth in Europe, Japan and China could also pick up mid-2019 at the same time US growth starts to slow due on the fading impact of President Trump’s late cycle fiscal stimulus and Fed tightening. A narrowing of growth differentials and subsequent pressure on the US twin deficits could pose further headwinds for USD.

 

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