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Dollar-o-meter: Keeping firm
We update our dollar-o-meter framework, this time also incorporating the dollar smile into our analysis. Despite growing headwinds, we argue that relative growth, inflation, central bank policy, politics, and the dollar smile still favour the USD. The USD has put the consensus on a wrong footing again this year. A year ago, consensus expected EUR/USD to trade around 1.20-1.25 by now, but instead the USD is trading at its strongest level since the spring of 2017 – versus the EUR and versus a broader basket of currencies. To see what the future may hold, we revisit our dollar-o-meter framework, which examines the ... (full story)