Forex News | Environment continues to support the dollar
|USD: environment continues to support the dollar
The coming weeks will decide how Brexit will proceed. There are probably now only two alternatives remaining: another postponement of the withdrawal date or withdrawal without an agreement. We expect the second. Once this outcome becomes obvious, the dollar could well gain further. Once the situation eases, however, the EURUSD should rise again to 1.10 by the end of the year. If, on the other hand, there is a new deadline, for example because new elections are to be held in the United Kingdom, the euro should rise only slightly and probably only temporarily, as the risk of a hard break would still exist. The recent announcement of the initiation of an impeachment procedures against President Trump – even if it has little chance of success – is another argument for why the dollar could continue to appreciate for the time being.
JPY: yen eases slightly
In September, the yen weakened slightly against the euro, to the level of 120. At its meeting in September, the Japanese central bank confirmed its willingness to carry out further monetary easing if a further slowdown in the global economy were to jeopardize the price stability target. Japan's inflation fell to +0.5% y/y in August. Over the past two years, Japan's inflation averaged around +0.8%, well below that of the Eurozone (+1.6%). From a fundamental point of view, this has favored firming pressure on the yen. For a trend reversal of the current strength of the yen against the euro, the outlook for the global economy would have to brighten. The consensus on Bloomberg expects the euro to strengthen against the yen, to 116 in 4Q19
CHF: increased volatility
The euro-franc exchange rate traded with high volatility in September and recently levelled off at 1.084, largely unchanged. Although the ECB announced substantial easing of monetary policy on September 12, the SNB did not adjust its monetary policy course at its meeting on September 19. Given the political developments in the United Kingdom, we expect hard Brexit at the end of October. This should further increase the firming pressure on the Swiss franc, especially at the end of October. Should other geopolitical crises escalate acutely (trade dispute, Italy), the franc could, as recently happened, quickly strengthen against the euro at any time.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.