Analyst: Trump's Policies May Weaken the Cyclical Support for the Dollar

Odaily Planet Daily reports that Jill Hirzel of Insight Investment stated in a report that the dollar might weaken as Trump's policies diminish the appeal of American exceptionalism and could lead to reduced capital inflows into the U.S. Hirzel said: "Policy uncertainty and a more aggressive 'America First' agenda may erode the cyclical support for the dollar, potentially leading it into a prolonged period of weakness." However, she also noted that investors should exercise caution when overly betting on the dollar's decline through short positions, as growth outside the U.S. is expected to remain weak at best, and speculators may already hold significant short positions on the dollar. Additionally, real interest rates adjusted for inflation are likely to remain elevated until there are signs of economic weakness significant enough to concern policymakers. (Jin10)