US economic outperformance to keep dollar strong
By Sarupya Ganguly
BENGALURU, Nov 1 (Reuters) -The U.S. dollar will hold on to its recent strength over coming months on robust domestic economic data and continued scaling back of bets for Federal Reserve interest rate cuts, a Reuters poll found.
Some analysts have attributed the dollar's 4% October .DXY rally to speculation about the likely result of the Nov. 5 U.S. presidential election. Others say the move is primarily due to resilient economic activity in the United States, particularly strong consumer spending and labor data.
The latest opinion polls show a near-deadlock between Democratic Vice President Kamala Harris and Republican candidate Donald Trump in the final stretch of a tightly-fought presidential contest.
Meanwhile, persistent U.S. economic outperformance has pushed financial markets to price in a higher year-end Fed funds rate than thought even a month ago. A separate Reuters survey of economists predicts two more quarter-point reductions this year.
Based on interest rate differentials, the dollar's recent momentum seems unlikely to fade quickly anytime soon. Fed peers, such as the European Central Bank, appear more likely to be aggressive in the near-term with rate reductions.
"In the U.S., we started getting better economic data, so we started pricing in a more hawkish Fed relative to what we had been and in Europe we started getting weaker data and so we started pricing in a more dovish ECB," said Dan Tobon, head of G10 FX strategy at Citi.
"We're basically just looking for the dollar to rally into the election, reverse that slightly and then chop around sideways like it's been doing now."
The euro EUR= will trade around its current $1.09 level by the end of November before edging up about 1% in three months to $1.10, according to median forecasts from over 70 forex strategists polled by Reuters from Oct. 28-31.
Yet, an overwhelming 90% majority of respondents, 28 of 31, to an additional question predicted better dollar performance in the immediate aftermath of a Trump victory. The currency is forecast to gain an additional 1.5% under that scenario and lose 1% if Harris wins, according to median responses.
"We're seeing risks to the dollar as asymmetric to the upside in case of a Trump victory and a bit more status quo, slightly maybe to the downside, in a Harris victory," said Alex Cohen, FX strategist at Bank of America.
"That's mainly due to trade and tariff policy in a Trump administration that could ... have a disproportionate impact on the dollar, pushing it higher both from expected inflation as well as from a trade perspective."
While both Trump and Harris have proposed policies that could reignite price pressures, Trump's policies would be more inflationary of the two, according to 39 of 42 economists in a separate Reuters survey.
Yet, the euro was forecast to rise to $1.11 by the end of April and then to $1.12 in a year, poll medians showed.
"Our medium-term view of the dollar is it should ultimately trade negative in a soft landing environment. But given how strong U.S. data has been recently, there are definite additional upside risks to that forecast," BofA's Cohen added.
Reporting by Sarupya Ganguly; Polling by Purujit Arun, Jaiganesh Mahesh and Renusri K; Editing by Ross Finley and Mark Potter
Aset Berkaitan
Berita Terkini
Penafian: Entiti XM Group menyediakan perkhidmatan pelaksanaan sahaja dan akses ke Kemudahan Dagangan Atas Talian, yang membolehkan sesorang melihat dan/atau menggunakan kandungan yang ada di dalam atau melalui laman web, tidak bertujuan untuk mengubah atau memperluas, juga tidak mengubah atau mengembangkannya. Akses dan penggunaan tersebut tertakluk kepada: (i) Terma dan Syarat; (ii) Amaran Risiko; dan Penafian Penuh. Oleh itu, kandungan sedemikian disediakan tidak lebih dari sekadar maklumat umum. Terutamanya, perlu diketahui bahawa kandungan Kemudahan Dagangan Atas Talian bukan permintaan, atau tawaran untuk melakukan transaksi dalam pasaran kewangan. Berdagang dalam mana-mana pasaran kewangan melibatkan tahap risiko yang besar terhadap modal anda.
Semua bahan yang diterbitkan di Kemudahan Dagangan Atas Talian kami bertujuan hanya untuk tujuan pendidikan/maklumat dan tidak mengandungi – dan tidak boleh dianggap mengandungi nasihat kewangan, cukai pelaburan atau dagangan dan cadangan, atau rekod harga dagangan kami, atau tawaran, atau permintaan untuk suatu transaksi dalam sebarang instrumen kewangan atau promosi kewangan yang tidak diminta kepada anda.
Sebarang kandungan pihak ketiga serta kandungan yang disediakan oleh XM, seperti pendapat, berita, penyelidikan, analisis, harga, maklumat lain atau pautan ke laman web pihak ketiga yang terdapat dalam laman web ini disediakan berdasarkan "seadanya" sebagai ulasan pasaran umum dan bukanlah nasihat pelaburan. Sesuai dengan apa-apa kandungan yang ditafsir sebagai penyelidikan pelaburan, anda mestilah ambil perhatian dan menerima bahawa kandungan tersebut tidak bertujuan dan tidak sediakan berdasarkan keperluan undang-undang yang direka untuk mempromosikan penyelidikan pelaburan bebas dan oleh itu, ia dianggap sebagai komunikasi pemasaran di bawah peraturan dan undang-undang yang berkaitan. SIla pastikan bahawa anda telah membaca dan memahami Notifikasi mengenai Penyelidikan Pelaburan Bukan Bebas dan Amaran Risiko mengenai maklumat di atas yang boleh diakses di sini.
