(1) FX strategists surveyed in the latest survey believe that the US dollar is more likely to remain strong in the coming months as the market reassesses how much more time the Fed is likely to cut interest rates.
(2) The U.S. dollar index reversed the short-lived decline that began at the end of last year, rising nearly 2.0% in January alone this year. A number of Fed officials have cooled market speculation about a rate cut in March, and according to the Intrerest Rate futures market, the current probability of a rate cut has fallen from a peak of about 90% to less than 20%.
(3) The unexpectedly good U.S. jobs report for January, the Fed's clear hint after last week's policy meeting, and Fed Chairman Jerome Powell's remarks in a follow-up TV interview have basically dashed hopes of an early interest rate cut.
(4) The latest data from the Commodity Futures Trading Commission (CFTC) showed that foreign exchange market speculators cut short bets on the dollar for the third week in a row, and this trend is likely to continue.
(5) In a Reuters poll on Feb. 1-6, nearly 80% of FX strategists (52 out of 67) said that more surprises in their six-month forecasts were likely to come from stronger-than-expected dollar movements. Only 15 said the bigger surprise could come from a weaker dollar.
(6) "The race has already begun, and at first the market questioned whether the dollar weakened at the start of the year. Now I think they're starting to believe that the strong dollar scenario should be closer to mainstream forecasts," said Paul Mackel, global head of foreign exchange at HSBC, adding that the pace of central bank rate cuts "will determine currency performance." "Overall, we believe that the dollar will strengthen this year, but not as unusually as in 2021 and 2022. ”
(7) With growth expected to lag behind the U.S. in most major economies and interest rate differentials in favor of the dollar, most strategists say it will be difficult to overturn the dollar's dominance in the near term.
(8) However, the median estimate of the 76 strategists surveyed suggests that the US dollar will weaken against most major currencies in three, six and 12 months from current levels. That's what analysts have been holding for more than a year.
(9) The euro traded around $1.07 on Tuesday and is expected to rise more than 4.0% to $1.12 in 12 months. USD/JPY is expected to fall more than 9.0% from current levels to 135.50. Median estimates for most major currencies have barely changed since December
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Survey: The dollar is expected to remain strong in the coming months, but analysts are more cautious
(1) FX strategists surveyed in the latest survey believe that the US dollar is more likely to remain strong in the coming months as the market reassesses how much more time the Fed is likely to cut interest rates. (2) The U.S. dollar index reversed the short-lived decline that began at the end of last year, rising nearly 2.0% in January alone this year. A number of Fed officials have cooled market speculation about a rate cut in March, and according to the Intrerest Rate futures market, the current probability of a rate cut has fallen from a peak of about 90% to less than 20%. (3) The unexpectedly good U.S. jobs report for January, the Fed's clear hint after last week's policy meeting, and Fed Chairman Jerome Powell's remarks in a follow-up TV interview have basically dashed hopes of an early interest rate cut. (4) The latest data from the Commodity Futures Trading Commission (CFTC) showed that foreign exchange market speculators cut short bets on the dollar for the third week in a row, and this trend is likely to continue. (5) In a Reuters poll on Feb. 1-6, nearly 80% of FX strategists (52 out of 67) said that more surprises in their six-month forecasts were likely to come from stronger-than-expected dollar movements. Only 15 said the bigger surprise could come from a weaker dollar. (6) "The race has already begun, and at first the market questioned whether the dollar weakened at the start of the year. Now I think they're starting to believe that the strong dollar scenario should be closer to mainstream forecasts," said Paul Mackel, global head of foreign exchange at HSBC, adding that the pace of central bank rate cuts "will determine currency performance." "Overall, we believe that the dollar will strengthen this year, but not as unusually as in 2021 and 2022. ” (7) With growth expected to lag behind the U.S. in most major economies and interest rate differentials in favor of the dollar, most strategists say it will be difficult to overturn the dollar's dominance in the near term. (8) However, the median estimate of the 76 strategists surveyed suggests that the US dollar will weaken against most major currencies in three, six and 12 months from current levels. That's what analysts have been holding for more than a year. (9) The euro traded around $1.07 on Tuesday and is expected to rise more than 4.0% to $1.12 in 12 months. USD/JPY is expected to fall more than 9.0% from current levels to 135.50. Median estimates for most major currencies have barely changed since December