Investing.com investing.com 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 Investing.com

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.

Read full story at investing.com