Dollar Depreciation Helps CTAs

Since the U.S. presidential election on November 3 th, the USD has started a descent that may have legs under the new administration. The easing of trade tensions and an accommodative policy mix could put additional pressure on the DXY, which was down -1.7% since the election, to the benefit of European currencies. Two runoff Senate elections in Georgia on January 5th will have key implications for the outlook. A Democratic Senate majority would entail more aggressive fiscal accommodation and probably a weaker USD. Current polls suggest the race is very tight.