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Jan 26 - 02:55 PM

USD: From The Reflation Trade In 2020 To The Inflation Trade In 2021 - Credit Agricole

By eFXdata  —  Jan 26 - 01:30 PM

Credit Agricole CIB Research discusses the USD outlook and adopts a neutral bias over the coming weeks.

"The ‘reflation trade’ was the main drag on the USD in 2020, especially after the Fed launched its average inflation targeting framework. The FOMC’s appetite for high inflation may soon be put to the test, however, with Credit Agricole CIB’s inflation strategist expecting US headline inflation to hit 3% YoY in Q2 and core inflation to recover as well," CACAIB notes. 

"To the extent that this reinvigorates the debate about the Fed taper, it could fuel the relative yield advantage of the USD and help it consolidate especially vs the JPY and CHF in the coming months," CACIB adds. 

Source:
Crédit Agricole Research/Market Commentary

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