While the higher interest rates of recent weeks have contributed to a certain recovery of the dollar globally, this recovery has been relatively limited and is also largely due to a lower appetite for risk.

It is the expectation of an economic reflation process that leads us to believe the dollar’s weakness will persist throughout 2021 and that the inverse relationship we have been observing between the dollar and stocks will hold firm.

Furthermore, we believe the dollar will continue to face key challenges in the coming months, given the projected increase in the U.S. deficit. The dollar remains 6% above its long-term averages in real terms.

The Dollar vs. the U.S. Budget Deficit

Dollar vs. MSCI World