The US dollar has been on an upward trajectory for a prolonged stretch, bolstered by superior growth performance. In a recent market analysis, Brandywine Global Investment Management explores the reasons behind the dollar’s sustained strength and evaluates if these underlying factors could continue to bolster the outlook for the USD in the short and long term.
“Private sector growth outperformance typically drives the US dollar since it also is what drives capital flows,” says Portfolio Manager Anujeet Sareen. “Additionally, dollar bull markets tend to parallel higher US interest rates. Technology leadership and energy, including the rise of shale gas and oil and the resulting US energy independence, have played important roles in support of current dollar strength as well.”
The asset manager is seeing signs of the dollar rally starting to narrow and expects the dollar to revert to levels seen in 2019, reflecting a weakening of approximately 10% from its current position.
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