UBS maintains its view on the USD: “Unattractive”. Cite 3 reasons to sell rallies

UBS are forthright with their view on the US dollar – “Unattractive” – say to sell bouts of dollar strength to reduce exposure.

UBS cite:

The Fed remains set to lower rates amid lower inflation.

US fiscal concerns are likely to keep the US dollar under pressure.

• in the event of a second Trump administration … tariffs are likely to hurt US consumers and GDP more than the rest of the world, and deficit concerns may also surface with potential tax cuts
• irrespective of who wins the presidency on 5 November, the growing US federal deficit is likely to come under the spotlight

Other currencies should see additional support

• we still expect a growth recovery in Europe going into 2025
• spillover effects from China’s stimulus efforts and the potential for more risk-on sentiment after the US election should support other G10 currencies, including the euro, the British pound, and the Australian dollar

This article was written by Eamonn Sheridan at www.forexlive.com.