Speculators still short the US dollar

It’s logical that the currencies of countries in the northern region of Asia have seen strength versus the US dollar, as for the most part, those countries moved swiftly and effectively at containing COVID-19, with the result that their economies are back to being in pretty good shape. And yes, I get it that the Americans are net creditors to the rest of the world and of course they’re in the midst of issuing trillions more dollars of net debt. What I have trouble fathoming is how Europe is going to be able to a) compete, and b) dig it self out from lousy growth and chronic disinflation if the euro keeps climbing against the UD dollar. As you can see from the picture below, the ‘DXY’, the value of the U.S. dollar relative to a majority of its most significant trading partners, it’s fallen 10% since mid-March. With a weight of roughly 57% in the DXY, a rising euro is a key to the fall in the DXY. Now trading at 1.2115 to the USD, if the euro rises much more……the EU’s growth prospects for 2021 will be materially dampened.

Disclaimer

This document has been prepared for information purposes only and is not, and under no circumstances is to be construed as, an offer to sell or a solicitation to buy any securities. The information contained herein is not intended to be, nor should it be considered as, a complete description of either the securities or the issuer of the securities described herein. All charts and illustrations in this document are for illustrative purposes only. All statements in this document are made as of the date hereof unless stated otherwise herein.

The opinions expressed in the communication are solely those of the author(s) and are not to be used or construed as investment advice or as an endorsement or recommendation of any entity or security discussed.

This document is not intended to provide legal, accounting, tax or investment advice. Each prospective investor should consult its own professional advisors as to legal, accounting, tax and related matters regarding the appropriateness of investing in the Funds.

Certain information contained herein is based on, or derived from, published and unpublished information provided by independent third-party sources which Forge First believes is accurate and reliable. However, Forge First cannot guarantee the accuracy of such information. The statements contained herein that are not historical facts and are forward looking statements, which are based on current expectations and estimates about particular markets. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions which are difficult to predict. Therefore, actual outcomes and returns may differ materially from what is expressed in such forward-looking statements.