Citi expressed a view that expects further weakening of the US dollar in the near term, although maintaining a positive stance towards the currency for the next two months. The brokerage noted that this outlook does not favor a broad-based strengthening of the dollar, as current market conditions suggest that safe haven currencies, such as the Japanese yen, may outperform, although long positions in the yen involve unattractive risk and returns.
Citi’s analysis suggests that riskier foreign currencies are likely to see more significant declines against the dollar in the coming weeks. The company’s comment signals a cautious stance towards the euro, suggesting that the backdrop is not favorable for the European currency. According to Citi, the global slowdown in manufacturing is expected to have a more pronounced impact on regions outside the US.
Citi’s commentary also touches on the European Central Bank’s (ECB) monetary policy, which is led by a focus on a single mandate. Citi believes that this approach may cause the ECB to delay its response to economic conditions. However, the company is also noticing signs that the ECB is showing greater concern about growth, which could have repercussions on the currency market.
Citi’s outlook on the US dollar and other currencies comes amid a complex global economic environment, with central banks navigating between inflationary pressures and the need to support growth. The company’s view suggests that investors may need to prepare for more volatility and divergence in the performance of different currencies.
This article was translated with the help of an artificial intelligence program after an editor’s review. For more details please refer to Banha Terms and Conditions
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