A Key USD Tailwind Fades

The surge in US corporate cash from foreign earnings held abroad flowing back into USD at home has ended for the time being. International corporations based in the US are retaining their earnings abroad again on a net basis in non-USD currencies and assets.

This repatriated earnings reversal eliminates a favorable source of flows amounting to nearly $200 billion quarterly into USD at its peak out of trading partner currencies such as euro, yen, Canadian $, Australian $, and Chinese yuan.

The immediate term tailwind for USD following passage of the 2017 Tax Reform and Jobs Act is transitioning to a more neutral impact, while simultaneously, longer-term structural debt problems will gradually (and then suddenly) enter the spotlight negatively for USD over the coming 3-5 years. This is not a major reason on its own for being fiercely bearish of the Greenback, but it also provides less of a reason to be bullish USD as cyclical drivers from fiscal stimulus are replaced by serious structural ones the more time passes.

19.03.11 usd repatriation over