The latest Global Investment Strategy report is entitled “Hiatus In The Dollar Bull Market”, and examines why the greenback has sold off this year and what the path forward is. The Weekly Report also discusses the Fed and the U.S. economy, the BoJ, and China, namely arguing the following points:
- The FOMC statement underscored the Fed’s willingness to take a ‘go slow’ approach to raising rates. While a June rate hike looks increasingly unlikely, a September and December hike remain in play.
- The lagged effects from the easing in U.S. financial conditions over the past few months should boost growth in the second half of the year. Diminished labor market slack is also likely to put upward pressure on wages.
- The BoJ’s reluctance to admit that NIRP has been a flop so soon after it was launched helps explain why it failed to provide more monetary support at this week’s meeting. We expect a new round of easing measures this summer.
- Chinese stimulus efforts should last a few more months, after which time commodity prices will resume their structural downward trend.
- As such, while the greenback could weaken over the next few months, this will simply be a hiatus in the dollar bull market.
- Investors should remain tactically bullish risk assets for now, but be prepared to shift to a more cautious stance in the second half of the year.
To access the report entitled “Hiatus In The Dollar Bull Market”, please click here.