Rabobank expects the US Dollar to remain firm as safe-haven appeal and robust economic growth outweigh concerns regarding the US budget deficit and recent treasury market volatility.
Rabobank argues that diminished fears of political interference at the Fed and evidence of safe-haven demand support the Dollar, and sees a preference for long USD positions as the EUR faces stresses in coming months. This supports a modestly firmer USD near term, though the bank flags the US budget deficit over 6% of GDP as a medium-term drag.
Rabobank expects the EUR to face stresses in the coming months and sees this supporting a preference for long USD positions, implying downside pressure on EUR/USD. The view is an analyst opinion rather than hard data, so the effect is only moderately likely.
Rabobank analysts maintain a bullish outlook for the US Dollar, citing reduced concerns over Federal Reserve political interference and persistent safe-haven demand. While the bank acknowledges that the US budget deficit, currently exceeding 6% of GDP, poses a medium-term risk, it dismisses previous fears of currency debasement as exaggerated.
Because fears of political interference at the Fed have diminished and the Dollar has shown strong safe-haven demand, which the bank sees as intact due to its embedded role in global payments systems.
Rabobank flags the US budget deficit, at over 6% of GDP and wider than France's, plus signs of stress in the treasury market, as factors that could weigh on the Dollar over the medium term.
Effectively yes: Rabobank says stresses the euro could face in the coming months support a preference for long USD positions.