The resilience of the US financial system in recent times was interpreted by many traders as an indication of US ‘exceptionalism’, Rabobank’s FX analyst Jane Foley notes.
Dollar’s international lead stays intact for now
“The surge in US recession fears that adopted Trump’s tariff bulletins on April 2 sparked a fast exit from ‘exceptionalism’ trades, which overpowered the USD’s conventional safe-haven attraction. Whereas different currencies are set to proceed chipping away on the USD’s dominance as the worldwide reserve forex, the dollar is about to take care of a transparent lead for a few years to come back.”
“In step with this, we count on that the USD’s protected haven character will be restored within the months forward. The precise timing will seemingly rely on whether or not US recession dangers enhance or disperse, since this may information internet flows out and in of USD belongings. On the again of the weakened outlook for the US financial system we preserve 12-month forecasts of EUR/USD1.15 and USD/JPY140.00.”
