USD likely to strengthen on global recession fears and renewed geopolitical tensions in the Middle East – NBF

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The appreciation of the trade-weighted US Dollar Index (DXY) has stalled over the past month. Economists at the National Bank of Canada analyze USD outlook.

A soft landing for the US economy would imply a weaker USD going forward

If you believe, as the Fed does, that a soft landing for the economy is on the horizon, this scenario would imply a weaker USD going forward. This is not our forecast. 

In our view, the US Dollar is likely to strengthen on fears of a global recession and renewed geopolitical tensions in the Middle East, which will drive safe-haven demand until the Fed is able to pivot and announce an easing of monetary policy.

 



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