Dollars bearers may want to hibernate this winter. Although many currency strategists have seen the American banker in 2019, some advise investors to keep their dust for now.
The Bloomberg dollar on Monday fell by as much as 0.6% and touched the strongest level for nearly 18 months. Last week, the US stock market and the Federal Reserve signaled a decline in the US stock market that it did not plan to step down from its tightened road and received additional stimulus on Monday, as political risks helped overturn the euro and pounds.
The trend of the "royal dollar" may have room for launch, Valentin Marinov, head of the Group-10 Group-10 strategy at Credit Agricole, said in an interview last week. As the Fed is expected to continue to increase its rate by 2019, the US currency may remain strong in the first quarter.
"You may see gradual grinding more, although it will drop quite a few high levels at the end of 2016, at the beginning of 2017," he said of a long-term loan. He pointed out that it would do the best in terms of currency with more exposure to China, such as Australia and New Zealand, but warned: "The dollar is close to the climax, and long-term risks from 6 to 12 months seem to be somewhere."
Kit Juckes, a global income-generating strategist at Societe Generale, also suspected that good dollar vibrations were dried. Between the rest of the US economy that is still hot, the tightening of the labor market and the Fed, which "unlikely give any indication that they are approaching the maximum rates in a few quarters," the bear in dollars has a lot of barriers to erasing, Jukes said in Pristina from November 8th.
The currency is overvalued and the market is long positioned, indicating that the correction will be likely in 2019, wrote Jukes. In the meantime, however, he is "ready to jump the pistol."
Ben Randol, senior director of the currency strategy at Bank of America, expects the dollar to weaken next year as US economic growth cools, he said in an interview last week. But it can find support from Brekit's hardship, the threat of a deeper Italian fiscal crisis and the tension of the United States in China.
"Time is very difficult," Randol said. "Given the risks, it may be a challenge to condemn enough enough for a short dollar."
A transition point may arrive at the end of the first quarter when political risk is rising again over the costs of the US government, said Marinos from Credit Agricole. Plus, the results of the semi-annual election in the US can prevent additional fiscal stimulus measures.
A pause in the increase in the fixed rates of the Fed in mid-2019 and the start of an increase in the rate in Europe could also be included. "We believe that growth will be moderate, especially given that the prospects for further aggressive fiscal stimulus can now reduce the political gridlock back to DC and intensify global wind growth," he said.
By the end of next year, the euro could return above $ 1.26 from about $ 1.13 at this time, while the dollar and yen rate, which is close to 114, could be below 104, he said. It could see that the dollar index returns to levels that last saw at the end of 2017 and early 2018, says Marinov. – Bloomberg