Highlighting several reasons behind the recent downturn of the USD, including a high valuation in recent years, a sizable trade deficit in the US economy, and the country’s sharp surge in fiscal deficit, Tai adds that while the USD has been able to “stay strong” until recently, there are new factors that may cause the reversal of its bullish trend.
The US dollar has been on the decline since the onset of the Covid-19 pandemic, partly due to an expected slowdown in the US economy’s growth.
The USD index has lost some 9% since March with the depreciation particularly rapid against European currencies, says Tai Hui, Asia chief market strategist at JP Morgan Asset Management, on August 5.
