Insight

Uncommon truths - Is ARP dollar positive?

March 22, 2021
Paul Jackson
Paul Jackson
Global Head of Asset Allocation Research
Andras Vig
András Vig
Multi-Asset Strategist
Uncommon truths - Is ARP dollar positive?

The US government is embarking on another round of fiscal stimulus. Estimates vary about the likely effect on the economy but we suspect it will boost the dollar over the coming quarters (despite longer term concerns). This has tempered our enthusiasm for commodities and EM assets.

A little more than four years ago (29 January 2017) we asked: Is the GOP tax plan dollar positive? We didn’t think so but were confronted by a lot of investors who believed the proposed tax cuts would boost the greenback. Now that President Biden’s American Rescue Plan Act of 2021 (ARP) has won congressional approval, we are not detecting the same degree of dollar enthusiasm (though that may be due to a lack of client contact!).

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  • The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

  • Data as of 18 March 2021 unless stated otherwise.

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