Dave Adams, Head of G10 Foreign Exchange Strategy at Morgan Stanley talks about their outlook for the US Dollar and why it may prove an important driver of investor returns this year.
We think the US Dollar is going to keep rallying, rising about 5% or so by the end of the year. Central bankers are likely to keep their feet on the brakes in order to tackle inflation. And in doing so, growth is likely to remain anemic, with risks skewed to the downside.
There are plenty of potential risks on the horizon to keep investors worried; banking sector volatility, geopolitical risks, and sticky inflation, just to name a few. As the investment outlook remains cloudy and hazy, the USD is a handy asset to keep in the portfolio as a positive carry insurance hedge.
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