EDITOR NOTE: Investors across the globe are positioning their portfolios in light of the current vaccine rollouts and the US fiscal stimulus package. International investors are either selling their dollar-denominated assets or they’re shorting the greenback to get some upside from the dollar’s downside. For instance, the Euro, Australian dollar, and New Zealand dollar are all experiencing multi-year highs against the US dollar. Their position is that the vaccine rollout will support global growth, especially in emerging economies while the US trails most of its peers. We’ve heard this before among major banks; it seems to be the popular line of thinking among global financial strategists. The dollar may be the worst best bet heading into 2021. But, if you’re looking to protect your dollar-denominated wealth, non-CUSIP gold and silver may be your best long-term investment.
Investors are betting that an improving economic outlook as COVID-19 vaccines are rolled out and unprecedented fiscal and monetary stimulus will boost global growth and asset prices in 2021.
U.S. economic growth is expected to drag behind peers, however, with the U.S. currency also suffering from rising fiscal and current account deficits as the government increases spending to tackle coronavirus-related business shutdowns.
Data on Wednesday showed that the advance goods trade deficit rose to a record $84.8 billion in November, from $80.3 billion in November.
“The start of COVID-19 immunization campaigns in several countries as well as additional U.S. fiscal support have reduced downside risk to the global economy and bode well for general financial market sentiment. This remains a drag for USD,” Elias Haddad, senior currency Strategist at Commonwealth Bank of Australia, said in a report on Wednesday.
The dollar fell 0.39% against a basket of currencies to 89.65 after earlier dropping to 89.56, the lowest since April 2018. It is down more than 7% this year.
Trading volumes are thin with many investors out between the Christmas and New Year holidays.
Originally posted on Reuters