On Friday, the official fiat currency of 19 out of the 27 member states of the European Union (EU), the euro, plunged to a low of $0.9732 against the U.S. dollar. The drop comes at a time when fiat currencies like the yen, yuan, and pound have struggled against the greenback during the past six months. Analysts claim the pound and euro are trapped in a “doom loop” and it’s also been said that the U.S. dollar is “the only possible hedge” against a failing global economy.
Citigroup Analysts Say Greenback Is the Only Haven in This Macroeconomic Environment
Strange days have found us in the world of finance, fiat currencies, stocks, bonds, and cryptocurrencies. On Friday, September 23, the European Union’s fiat currency the euro has been struggling against the U.S. dollar and slipped below parity as the weekend nears. The euro is currently trading for $0.97 and it tumbled to a low of $0.9732 during the morning trading sessions (10 a.m. ET). The euro has lost more than 1% against the greenback in 24 hours and it’s the lowest it’s been in 20 years.
Bloomberg contributors Sofia Horta e Costa and Ruth Carson recently referenced analysts from Citigroup Inc. and the views of the Canadian Imperial Bank of Commerce. “The surging dollar has caused a lot of people to believe the only safe haven asset is the U.S. currency,” the writers explained last week. The duo received a research note from Citi strategists Jamie Fahy and Adam Pickett who discuss the phenomena surrounding the U.S. dollar.
“The only place to hide is in US dollar cash,” the Citi strategists claim. A “deep recession” will drop inflation the bank’s financial strategists add. Win Thin, the lead currency strategy analyst at Brown Brothers Harriman in New York says the macroeconomic backdrop seems to favor the dollar. “The repricing of Fed tightening risks is likely to keep the dollar bid across the board in the near term,” the Brown Brothers Harriman executive said. Brown Brothers Harriman’s currency strategy analyst continued:
As we said during this most recent dollar correction lower, nothing has really changed fundamentally and the global backdrop continues to favor the dollar and U.S. assets in general.
TD Securities Strategists Believe…
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