Deutsche Bank: tariffs could trigger weaker dollar trend

The weakening of the US dollar was a bit of a surprise, as analysts expected the greenback to strengthen in response to US tariff measures. George Saravelos, an analyst at Deutsche Bank Research, writes: ‘Tariffs are simply a tax and therefore represent fiscal tightening.’ Meanwhile, policy uncertainty is on the rise. Market expectations of a ‘narrowing of the growth gap between the U.S. and the rest of the world’ are therefore reasonable, adds Saravelos, adding that the dollar's safe-haven status is also likely to weaken. Saravelos is neutral on the dollar outlook, but ‘we are starting to be more open to the prospect of an overall weaker dollar.’