Stronger Dollar

| Multi Asset

In line with the revision of the Fed’s inflation forecasts at its March meeting (PCE revised from 1.8% to 2.4% for 2021), our Nowcaster indicates that the US is the economy with the highest inflation pressures. Our US indicator is ahead of the one for the Eurozone, Switzerland, Great Britain, the Nordic countries, Japan and Australia. It is even ahead of several emerging countries (notably Russia and Mexico) where food inflation is running hot.

These global Nowcaster spreads justify an overweight to the US dollar, and the signal intensity is equivalent to February 2018, when we observed a marked appreciation in the dollar, beyond the “Volmagedon” episode. This was also the case in 1993, 1997-1998 and 2005, periods that were all followed by a broad-based increase in the dollar’s value.

 

Stronger Dollar
Source: Bloomberg, Unigestion. Data as at 19 March 2021.


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