A weaker U.S. dollar may be a consensus call for 2021, but many investors underappreciate just how steep the currency’s fall could be, warned longtime currency manager Ulf Lindahl.
Lindahl has been looking for a steep dollar selloff this year, which could see the euro EURUSD, +0.21% run to $1.50, a level last seen in 2009. That would mark a rally of around 22% for the shared currency versus the dollar, which now trades north of $1.21. Investors underappreciate just how sharply the dollar can move in the early phase of what he has identified as 15-year cycle, Lindahl said .
Lindahl sees pressure on the dollar as foreign government bond yields rise, shedding negative interest rates. U.S. Treasury yields will be hard pressed not to also see upward pressure, particularly as the U.S. government moves to cover a growing fiscal deficit.
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