Deutsche Bank says does not see good risk reward in shorting dollar anymore

FILE PHOTO: A statue is pictured next to the logo of Germany's Deutsche Bank in Frankfurt, Germany September 30, 2016. REUTERS/Kai Pfaffenbach

LONDON (Reuters) - Deutsche Bank 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.

Reporting by Dhara Ranasinghe, Editing by Abhinav Ramnarayan