Economics Weekly: The Dollar's Mini-Revival

In our 2021 Economic Outlook, we wrote that there was an overwhelming consensus among financial market strategists and economists that the dollar would be weaker in the coming year. While we acknowledged that such a strong consensus set off a number of flashing red lights at the time, we were nevertheless in agreement with this view. Since then, as is so often the case with currencies (and why we have often felt the term 'currency strategist' is an oxymoron), the dollar has been steadily strengthening and is up 2.2% since its low at the start of January.

In this Economics Weekly we reexamine the weaker dollar's call and what might or might not have changed.

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Richard de Chazal, CFA is a London-based macroeconomist covering the U.S. economy and financial markets.