6.8.20 Twin Deficits May Weigh on the Dollar
It has been a volatile year for the US dollar, which has given back nearly all of its gains in 2020 after behaving as a “safe haven” during the market volatility in March. While a variety of factors and headlines can have short-term effects on the dollar, an important longer-term driver is the US “twin deficits”—the combination of the budget deficit and the trade deficit.
As a historical net importer, the US has usually carried a trade deficit, and with the passage of the record setting CARES Act—the first trillion dollar stimulus package—the budget deficit has ballooned and has stretched
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