CIti 'remain structurally bullish' USD, but do highlight 'the biggest risk' (ps its a tail risk)

Citigroup head of G-10 FX strategy in NY says remains structurally bullish on the USD, citing:

• strong growth
• Fed rate hikes
• relative yields (drawing in capital to the US)

But say President Donald Trump could change that

• his admin has a preference for a weaker US dollar
• combined with his unpredictable policy moves

Citi also warn

• "The biggest risk to our view, however, is that the Treasury decides to intervene to weaken the USD. Though still a tail risk, if they were able to corral the Fed to participate, this would be a game changer for the USD outlook."

(ps. Note Citi says that is a 'tail risk', i.e. the chances are low but not zero)

--

Note, ICYMI, the 'intervention' chatter has been a recurring tail risk citied (yes, unlikely as it is … it is present).

I wonder if it was me who got the ball rolling TBH … :-( … this from ages ago:

• What if Trump looks at the climbing USD and tweets he wants a managed exchange rate?

Followed by:

• JPMorgan says Trump may sell dollars as weapon in US trade war

and

• Natwest Markets … we should not rule out such a directive coming from Trump to Mnuchin if he becomes frustrated with continued USD strength

At this stage it would probably not be a bad idea to reiterate, in all caps - THIS IS A TAIL RISK … not a central base case by any means.

If anyone would do it, even if just a little bit, its this chap!