Weak Dollar trades not going anywhere - Reuters poll

Reuters is out with poll of strategists in the currency sphere, and the results suggest that many experts expect the US Dollar to sink over the coming year.

Key quotes (source: Reuters)

“While the prospect of a trade war has leapt to the number one risk for global investors following China’s swift retaliation to U.S. tariffs, FX markets have taken on the role of a casual observer,” said Viraj Patel, FX strategist at ING.

While little short-term movement was predicted in the latest Reuters poll of over 60 foreign exchange strategists, taken April 3-5, the dollar was forecast to weaken over the coming year, unchanged from last month’s survey.

But the latest poll forecast the greenback to weaken in a year, leaving the euro at $1.28, up 4 percent from around $1.23 on Thursday. Those expectations were similar to predictions made in a March poll.

Strategists have held on to a weak dollar outlook in Reuters polls since the start of last year. The greenback fell 10 percent in 2017 and is down a little over 2 percent so far this year.

Thirty of 55 strategists who answered an extra question said their view on the dollar’s performance this year had not changed based on the tit-for-tat trade war.

While 16 respondents said the trade row will weaken the dollar further, the remaining nine said they had changed their view in favour of the U.S. currency.

Half the 34 strategists who answered a separate question said the current level of net short dollar positions was just about right. While 10 respondents said they were too high the remaining seven said they were too low.

That will likely push the euro and other major currencies to make further modest gains against the dollar over the coming year. But the strength of the euro, up over 2 percent against the dollar this year, appears to have curbed growth somewhat in recent months.

A private survey showed signs of a slowdown in the euro zone business activity were widespread, with growth in the bloc’s big four economies as well as Ireland all moderating.

Sterling forecasts were at their highest since Britons voted to leave the European Union, in part as progress in divorce talks alongside solid expectations for an interest rate rise next month drove optimism. [GBP/POLL]