07 Jan, 2021 07:30 am

Is A Weak U.S. Dollar A Key Macro Theme For 2021?

Is A Weak U.S. Dollar A Key Macro Theme For 2021?
Forex Analysis by James Picerno covering: XAU/USD, US Dollar Index Futures, Gold Futures, Crude Oil WTI Futures. Read James Picerno's latest article on

p The dollar’s decline in recent months marks a dramatic reversal in a short period, but over the longer run forex volatility tends to be a wash.You can certainly earn outsized returns (or lose lots of money) in currency trading, but in the long run forex risk is, in theory, a wash in terms of generating a risk premium.In the long run, forex risk will probably remain a wash, but that doesn’t mean 2021 could be increasingly uncomfortable for dollar bulls.As a rule of thumb, the expected return for forex risk is zero, at least on a buy-and-hold basis.

The world’s reserve currency has been weakening since May and recent trending behavior suggests the slide has room to run and so it’s time for a short recap of the implications and the outlook for what could be a major driver of investment results in 2021.A growing chorus of cryptocurrency bulls add that the likes of Bitcoin and Ethereum will do well if the world’s reserve currency fades.

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