According to analysts from Wells Fargo, the upward tone in the US dollar is likely to continue, with a potential peak during the first half of 2018; then a depreciation trend could start.
Key Quotes:
“The greenback has gained over the past month as U.S. economic data have generally been stronger than expected, Fed commentary has become more hawkish and the financial markets have priced in a March Fed hike. We expect this trend of U.S. dollar appreciation to continue as the market moves toward fully pricing in a June rate increase. More generally, as U.S. economic growth shows a slight upswing, supportive fiscal policy remains a potential upside risk for growth and the U.S. dollar.”
“There are also some hints of policy adjustments from foreign central banks, although for now those hints remain tentative. The European Central Bank (ECB) is about to start reducing the pace of its asset purchases and its language has become less dovish in recent months. In contrast, the Bank of Canada’s policy outlook remains relatively benign, and indeed slightly lower oil prices have weighed on the Canadian dollar recently.”
“While we believe there will be eventual tightening by foreign central banks, we expect that eventuality will be more relevant for currency markets in 2018 than in 2017. The U.S. dollar could face countervailing forces in 2018. Repatriation flows associated with tax reform could potentially support the dollar, but foreign central bank moves could potentially weigh on the greenback. Against this backdrop we see an overall peak in the greenback in the first half of 2018, ahead of a depreciation trend in the U.S. dollar beginning in the second half of next year.”
v
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.
Recommended content
Editors’ Picks
GBP/USD resumes upside toward 1.3300 ahead of BoE rate call
The GBP/USD gains traction and approaches 1.3300 in European trading on Thursday, having found buyers near 1.3150. A broad US Dollar pullback and a rebound in risk sentiment offer support to the pair ahead of the BoE policy announcements.
EUR/USD rises further toward 1.1200, focus shifts to ECB-speak
EUR/USD stays strongly bid toward 1.1200 in the European session on Thursday. The pair capitalizes on a renewed US Dollar retreat and an upbeat mood. Traders digest the Fed's dovish outlook, bracing for ECB-speak for fresh trading incentives. US data are also eyed.
Gold hovers close to new high of $2,600 after Fed meeting
Gold (XAU/USD) edges higher and trades back in the $2,580s on Thursday after falling to the $2,540s following the US Federal Reserve (Fed) decision on interest rates the prior day.
BoE expected to keep interest rate unchanged at 5% as price pressures persist
After a close call in August, the Bank of England’s September interest rate decision is keenly awaited for fresh cues on the bank’s future policy action and the pace of its bond sales.
Bitcoin surges to $62,000 mark after 50 bps Fed rate cut
Bitcoin and Ripple eye for a rally as they break and find support around their resistance barrier. Meanwhile, Ethereum demonstrates signs of recovery as it approaches a critical resistance level, indicating that an upward rally could be on the horizon if it successfully breaks through.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.