USD correction set to last – Commerzbank

Over the past to trading days, the US Dollar eased quite significantly. Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank,  sees a good chance that the USD correction will last.

The previous USD strength is now regarded as excessive

The previous USD strength is now regarded as excessive because the US monetary policy appears not as exceptional as the USD bulls had previously expected after all. I therefore assume that the USD weakness seen since Wednesday evening was not just a Thanksgiving special effect, but the continuation of the dominant subject. 

We expect a period of economic weakness in the US medium-term. To an extent that will likely deserve the label ‘recession’. I am therefore principally pessimistic about the US data. And even secondary data could support a USD-negative view. Also, from the point of view of the traders who return from their Thanksgiving break. They would then be more inclined to jump onto the bandwagon they missed as a result of all the turkey eating.