Credit Suisse discusses the USD outlook in the medium-term and maintains a structural bullish bias.
"Where to from here? We entered 2020 as USD bulls, and argued that coronavirus added further fuel to that view as opposed to clipping its wings, initially targeting 1200 for BBDXY. With the market at exactly this level at time of writing, we feel inclined to stick to our guns," CS notes.
"Firstly, it's not clear that matters will necessarily come to a quick conclusion, which leaves open room for another leg higher for USD if USDCNH again surpasses 7.00 and this time meets less resistance. On the flip side, we see little reason for the Chinese authorities to engineer a strong rally to 6.90 or below given the clear hit China's economy is likely to take at least in Q1 2020. This underlines a broader point we would like to make, which is that it's totally possible that the next phase of price action will see non-US equity markets regain their upward momentum, but without corresponding strength in their currencies against the USD," CS adds.