UBS analysts warn that trade wars continue to pose a threat to the US dollar.
They note that some U.S. trade partners may delay striking deals with a potential Trump administration, hoping for more favourable terms, which could lead to a fresh round of tariff escalations and increase downside risks for the dollar. UBS sees limited scope for the Fed to hike rates, which would normally support the dollar. Instead, they expect upcoming data to show the economic toll of tariffs, prompting markets to anticipate rate cuts. As a result, UBS projects a weaker long-term outlook for the dollar.
This article was written by Eamonn Sheridan at www.forexlive.com.