LONDON (Reuters) - Deutsche Bank (DE:DBKGn) said on Wednesday it had changed its view on the U.S. dollar given an extremely uncertain U.S. election outcome and no longer sees a "compelling narrative" for dollar weakness.
Deutsche cited three reasons for its change of view: an easing in expectations for hefty fiscal stimulus, the risk of a protracted contested election result, and a chance that the election uncertainty leads to a politicisation of COVID-19 containment measures.
"All in, we do not see good risk reward in shorting the dollar anymore, especially against EM FX," Deutsche Bank analysts said in a note, referring to emerging market currencies.
The dollar (=USD) rose as much as 1.2% overnight to hit more than one-month highs versus its rivals as early U.S. presidential election results indicated a tight race.