Over the past month, the US dollar has surged sharply higher. Economists at Standard Chartered expect the US Dollar Index (DXY) to reach the 116.50-117.00 area but see the greenback peaking over a 6-12 month horizon.
USD to peak over a 6-12 month horizon
“On a three-month horizon, DXY is likely to rise towards 116.50-117.00.”
“Near-term USD strength is likely to be driven by (i) the likelihood of Fed hiking rates at a faster pace relative to the other major centralbanks, which can continue to push interest rate differentials in favour of the USD, (ii) greater global growth concerns that are likely to fuel safe-haven USD demand, and (iii) elevated geopolitical concerns, especially in Europe and the Middle East.”
“Over a 6-12 month horizon, we expect the USD to peak. In our assessment, (i) we expect US inflation to gradually turn lower over 2023, which should give the Fed the leeway to slow or even pause rate hikes, (ii) rate hikes from other major central banks through 2023 should narrow the interest rate differentials with the US, (iii) capital flows are likely to turn away from the US on slower US growth and robust growth in Asia, and (iv) easing of geopolitical uncertainty around Europe and improving Chinese growth could potentially reduce the safe-haven demand.”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.