Demand for US dollar seems to be waning’: Deutsche Bank

The currency markets are currently facing “multiple cross-currents” on rising global concerns over a potential second wave of Covid-19, said Deutsche Bank’s chief Asia macro strategist Sameer Goel.

According to him, the “big question” for investors is whether the US dollar should be trading at a safe-haven risk premium.

Goel told CNBC that since March, investors have been favoring the greenback over its peers in the Group of 10 countries, in part due to “emergency dollar demand” as the world went into a synchronized shutdown to stop the spread of the pandemic. As investors typically flock to the US dollar in times of uncertainty, partly due to its position as the world’s reserve currency, “that emergency dollar demand seems to be waning.”

Furthermore, “the exit strategy for the US, if anything, looks poorer than it is for the rest of the world,” Goel said, referring to the lifting of lockdown measures and the reopening of the economy. “Our mobility tracker suggests that [the] bulk of Europe, for example, is opening up faster than [the] the US is.”