Société Générale: A mild recession in the U.S. may lead to a weaker dollar

Société Générale strategist Kit Juckes pointed out that the U.S. economy faces the risk of slipping into a mild recession, which could trigger larger rate cuts and lead to a weaker dollar. He stated that the slowdown in growth and high valuations in U.S. stocks may replicate the mild recession scenario of 2001. Looking back at history, the Federal Reserve slashed interest rates from 6.5% to 1.0% between 2001 and 2003, while the dollar index plummeted by 40% over the following seven years. Juckes warned, "If concerns about inflation, economic growth, asset valuations, and market bubbles ultimately tip the scales, leading the economy into recession, the declines in interest rates and the dollar may exceed our expectations."