Dollar Outlook for 2021 Still a Cyclical Story, RBC’s Lignos

The video discusses the impact of the reflation trade on the dollar, highlighting the cyclical nature of the dollar's outlook for 2021. It emphasizes the strength of the US recovery and its influence on global demand. The discussion also covers currency dynamics, focusing on the role of interest rates and fiscal stimulus, and the limited impact of government policies on currency levels. Finally, the video examines yield dynamics and trading strategies, noting recent dollar performance and potential tactical reversals.

What is the primary reason for the dollar's potential strength against certain currencies in 2021?

• Lack of US recovery

• Weak global demand

• The cyclical nature of the dollar

• A broad dollar sell-off

What factors are most influential in determining a currency's value according to the transcript?

• Central bank policies

• Public opinion

• Nominal interest rates and fiscal stimulus

• Government interventions

How does the Biden administration's approach to the dollar compare to the ECB's approach to the euro?

• The ECB is less concerned about the euro's strength

• Both prioritize currency strength over other policies

• The Biden administration is more focused on the dollar

• Neither administration prioritizes currency levels over other policies

What recent market event caused the dollar to bounce against other currencies?

• A decrease in US yields

• A rise in US yields

• A global economic downturn

• A new fiscal policy

What strategy is suggested for trading in the current yield dynamic environment?

• Avoid trading altogether

• Tactical reversals and selective underperformance

• Short dollar across the board

• Long dollar across the board