U.S. dollar likely to weaken as deficit rises, political uncertainty persists
If you’re looking for guidance on the direction of the U.S. dollar going forward, the growth of America’s budget deficit is a good place to start.
Following on the heels of massive tax cuts, Congress approved another injection of fiscal stimulus in February, this time in the form of a boost to spending limits. As a result, the U.S. budget deficit is expected to climb past US$1 trillion in 2019, equivalent to more than five per cent of GDP.
“If history is any guide, the U.S. dollar… could continue to struggle,” said Krishen Rangasamy, senior economist at National Bank Financial.