All that glitters

All that glitters


Even though it’s unlikely to be a straight line from here, we expect the US dollar to weaken further over the medium term and gold prices to stay well supported.

We see no near-term catalyst for further US dollar weakness and believe that verbal intervention by the European Central Bank (ECB) should mitigate any further euro appreciation for some time. Our new year-end target for the US dollar against the euro – at 1.20 – is similar to current exchange rate levels. Yet we expect the US dollar to depreciate further in 2021 and 2022. As the EU recovery fund brings an extra layer of fiscal integration, the US dollar may end 2021 at 1.25 versus the euro, which would be at the low end of the range of fair value estimates. We believe the US dollar could fall to 1.28 against the euro in 2022.

Forward contracts point to a flat path for the euro/dollar exchange rate over the next year or so. Yet our analysis suggests the US dollar is overvalued by around 8% versus the euro, and we use this information to determine the direction of our long-term forecasts.

All forecasts are not a reliable indicator of the future position.

For those clients who have access to My Brown Shipley you can check your portfolio valuation online. If you have any questions, please contact your usual Brown Shipley adviser.


Daniele Antonucci
Chief Economist & Macro Strategist

James Purcell
Group Head of ESG, Sustainable and Impact Investing

Bill Street
Group Chief Investment Officer

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