Crack in US dollar strength to spread as economy slows: Reuters poll
By Hari Kishan
BENGALURU (Reuters) — The dollar's recent weakness will linger for the rest of the year, according to a majority of FX strategists in a Reuters poll, who also said economic data will be the primary influencer of major currencies for the rest of 2023.
A stronger-than-expected U.S. economy and rising Treasury yields as the Federal Reserve hiked interest rates to curb high inflation provided the dollar with an unassailable edge over its peers.
But renewed expectations the Fed is done with its rate hikes have put the dollar at a disadvantage, with the currency losing almost 2.0% from last month's peak, leaving the dollar index up around 2% for the year.
Suggesting the current dollar weakening trend has further to go, a near two-thirds majority of analysts, 28 of 45, who answered a separate question said the dollar is likely to trade lower than current levels against major currencies by year-end.
They also expect it to slip against the euro and other G10 currencies over the next 12 months, a position analysts have held all year but have been proven wrong each time. Some are sounding more confident this time they will be right.
«The dollar and U.S. yields have had a strong bullish trend over the (past) two to three months… but it looks like we've reached a point where yields and the dollar have peaked out,» said Lee Hardman, senior currency analyst at MUFG.
«It's going to be harder for yields to hit fresh highs this year because markets are now more confident that the Fed is done hiking, speculation has already started to intensify again that next year we could see a policy reversal from the Fed with speculation building over more aggressive Fed rate cuts next year.»
When asked what will be the primary
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