Analyst: Trump's policies may lead to a prolonged period of dollar weakness

On August 21, Jill Hirzel of Insight Investment stated in a report that the dollar may weaken as Trump's policies undermine the appeal of American exceptionalism and could lead to a reduction in capital inflows to the United States. Hirzel noted, "Policy uncertainty and a more aggressive 'America First' agenda could erode the dollar's cyclical support, leading it into a period of sustained weakness." However, she also pointed out that investors should remain cautious when excessively betting on a dollar decline through short positions, as growth outside the U.S. is expected to be at best weak, and speculators may already hold substantial short positions on the dollar. Furthermore, adjusted for inflation, real interest rates may still remain elevated before signs of economic weakness arise that are sufficient to concern policymakers.