Heng Koon How, CAIA, Head of Markets Strategy and UOB Group Senior Forex Strategist Peter Chia expect that the dollar outlook remains negative for the moment.
Key Comments:
“Our base scenario is still that the US dollar will gradually weaken and that many of the predominant drivers of the weak US dollar they haven’t changed at all“.
“While the recent news of progress on the COVID-19 vaccine is really encouraging and very welcome, the logistical requirements to distribute the vaccine are challenging and the subsequent rally in the USD is likely to be temporary short coverage.”
“We continue to see the renminbi strength in the coming months, pushing the USD/CNY a 6.40 in the second quarter of 2021. At the same time, SGD will continue to strengthen together with the Renminbi and as a result we see a USD / SGD lower at 1.32 for the second quarter of 2021 “.
“However, you have to take into account the increasing granularity in the prevailing context of the weak US dollar. EUR and AUD can make limited gains as their respective central banks extend monetary easing. And in Asia, INR and IDR will likely remain weak due to their respective weaker dynamics. “Dollar expected to remain weak – UOB
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