Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

The U.S. dollar is expected to continue declining, pressured by rising trade and fiscal deficits along with recovering growth that is being powered by a rise in commodities prices, a fund manager and two economists said.

However, a rise in real yields in the United States backed by a strong recovery in the economy will keep the dollar from falling drastically, Binay Chandgothia, managing director and portfolio manager at Principal Global Investors in Singapore, told the Reuters Global Markets Forum on Wednesday.

“My sense is that the dollar weakens a tad more, (by about) 2%-5%, from here,” said Chandgothia, whose firm manages nearly $545 billion in assets.

Story continues below advertisement

He added that the dollar could get a lift from the U.S. Federal Reserve changing its stance as this will start pushing up real yields at the short-to-medium end.

The Fed is likely to stay on course despite growing momentum in the U.S. economy in its policy statement due at 2 p.m. EDT on Wednesday.

Robert Carnell, chief economist and head of research at ING Asia in Hong Kong, said he expected the Fed taper to likely come at a time when U.S. inflation will be dipping and prices in Europe will be picking up.

“And this makes timing any currency direction very hard.”

Peter Cardillo, chief market economist at Spartan Capital in New York, said he expected the dollar index to break below the 90-level “convincingly,” on the back of U.S. deficit spending, President Joe Biden’s infrastructure bill and government spending on entitlement programs.

“I feel (the dollar index) would trade around 83.50 by December 2021,” Cardillo said.

The dollar index has fallen 2.6% from its 2021 high hit on March 31, and is now trading at 91.004.

Story continues below advertisement

Carnell said he wasn’t worried about inflation spiraling out of control, and that central banks in developed economies had been waiting for these price increases to show up.

“Though ultimately, it does argue against maintaining emergency stimulus measures,” he added.

ING Asia expects the euro to trade at 1.28 against the dollar by year-end, but Carnell said there were many factors that could undermine that call.

“The timing of a broader global recovery is one, (and the others are) the timing of the taper from both the European Central Bank and the Fed,” Carnell said.

The euro has risen 3.1% against the dollar from its March 31 low, and is now trading at $1.2066.

Both Carnell and Cardillo expect the U.S. 10-year bond yield to rise to around 2.25% by the end of 2021.

Story continues below advertisement

The benchmark 10-year yield is currently at 1.6378%, down from 1.776% on March 30, but has risen from its 2021 low of 0.906% hit on January 4.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies