Pimco says the dollar is expected to fall in all but the most extreme cyclical scenarios in the future
The investment firm says the dollar faces an “uphill battle” for support as the Fed’s accommodative monetary policy depresses returns:
“We believe that an unprecedented degree of budget support, the expected Fed commitment to offset past overruns on inflation targets, and the uneven recovery by the United States are likely to give the dollar a depreciating bias across all cyclical scenarios except the most extreme. “
Adding that the speed at which a successful coronavirus vaccine will also affect how fast the dollar can sink from here on out.
The company also claims that as the dollar falls, the currencies likely to gain against the greenback are the euro (due to the ECB’s PEPP and the recovery fund), the aussie, the loonie, the krone. Norwegian, Chinese yuan and Korean won (improving risk appetite).