MUFG anticipates a resumption of USD appreciation over the approaching months, following a quick pullback post-election. President-elect Trump’s robust mandate and deliberate insurance policies on commerce tariffs, tax cuts, and elevated fiscal spending are anticipated to assist greater yields and drive USD power, notably over the subsequent 3-6 months.
Key Factors:
- Trump Coverage Affect: Trump’s insurance policies—tariffs, immigration enforcement, and monetary enlargement—are anticipated to elevate yields and assist USD, as markets anticipate swift motion.
- Market Positioning: The latest dip in USD displays an election final result that was already priced in, however MUFG sees room for renewed USD power as markets place for coverage implementation.
- Medium-Time period USD Dangers: MUFG acknowledges that medium-term greenback power might face headwinds as the complete affect of those insurance policies turns into clearer, although the short-term outlook favors USD beneficial properties.
Conclusion:
MUFG expects the ‘Trump commerce’ to renew, with additional USD upside within the close to time period as traders place for anticipated fiscal and commerce insurance policies. Whereas medium-term sustainability of this power is unsure, a 3-6 month horizon reveals robust potential for additional USD appreciation.
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