QCAM Monthly January 2021 – Reflation and its risks

  • 07.01.2021
  • FX Monthly

QCAM Insight

The deployment of Corona vaccines is widely expected to reflate the global economy in 2021. The big risk is that the vaccination campaign disappoints. The other concern is that reflation will boost inflation and central banks will be reluctant to tighten policy. Global reflation is widely seen as USD negative. Thus, vaccination failing to deliver the expected results could be USD positive.

Economy and Interest Rates

First-quarter growth is depressed by the rise in Corona infections in Europe and the US. However, manufacturing activity is holding up well and the outlook improves in the second quarter with the expected wide-spread deployment of Corona vaccines.

FX Markets

The USD depreciated further versus all major currencies over the last months on continued positive risk sentiment. Safe-haven currencies like the CHF and the JPY performed well, but the GBP lagged a bit behind since the closure of the EU-UK trade deal.

FX Analytics

Going into more detail: Based on our proprietary analytical framework to take scalable exchange rate positions we are taking a close look on individual currency pairs.

Download: QCAM MONTHLY January 2021

Follow-Up results

This is next in your query
QCAM Monthly June 2021 >> The new theme on the block

The USD declined further in May as vaccination and recovery momentum increased in other economies...» more

QCAM Monthly May 2021 >> Mixed picture with e...

The USD fell back in April as the rise in US interest rates faded. No strong trend has yet emerged a...» more

QCAM Monthly April 2021 >> Ides of March or A...

The USD strengthened in March on the back of improved economic sentiment and rising bond yields. The...» more

QCAM Monthly March 2021>> A “tantrum” for...

News over the last month were on balance growth friendly and lifted risky assets but inflation conce...» more