Although higher interest rates in recent weeks have contributed to some recovery of the dollar globally, this has been relatively limited and has much to do with a lower appetite for risk, this has been relatively limited and has much to do with a lower appetite for risk.

It is the expectation of an economic reflation process that makes us lean toward dollar weakness continuing through 2021 and that the inverse relationship we have been observing between the dollar and equities will remain strong.

In addition, we believe that the dollar will continue to face key challenges in the coming months, given the higher projected US deficit. The dollar remains 6% above its long-term averages in real terms.

Dollar vs. U.S. Fiscal Deficit

Dollar vs MSCI World