FXStreet reports that the FX market is looking beyond 2021 as USD fails to follow risk-off, economists at MUFG Bank brief.

“Around 440K new COVID-19 cases were reported last week in the US and there is evidence of infections spreading back to urban areas like New York. Restrictions remain more sporadic in the US than in Europe but at the current pace, tighter restrictions are inevitable which will reinforce a worsening economic outlook. US Q3 real GDP is likely to expand by over 30.0% on a SAAR Q/Q basis but if COVID-19 fuels more restrictions then the slowdown in Q4 will take GDP back down close to 1-2%.” 

“Whoever wins the election next week, a large fiscal stimulus is coming and coupled with that we believe the Fed will persist with an aggressive easing stance for longer than is usual for the Fed.”

“We believe the consequences of a Biden victory for the equity markets are less clear than the consequences for the US dollar.”

“We see a weaker USD in 2021 no matter who wins but we are more confident of that under a Biden presidency.”