The US dollar has recovered from the period of weakness in early/mid July. But what next? In the view of Ulrich Leuchtmann, Commodities and Currency Research Director at Commerzbank, it makes sense to look at actual returns.
The US economy is better protected from headwinds than Europe
In the aftermath of Covid, in particular, it might have been assumed that some of the causes of US economic resilience might have abated. It may no longer be so easy to lure American consumers into excessive consumerism. Perhaps – in their role as employees – these consumers are no longer willing to work in conditions that we Europeans can only imagine for developing markets. Assumptions of this type are unjustified from today’s perspective.
A few years of pandemic have not substantially changed American consumers. And consequently, the American economy is better protected against any headwind than the European one. That means US capital spending pays off more in the long run. And that makes the currency needed to make capital in the US work – the dollar – more desirable and therefore more expensive.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
