Dollar to stay firm on expectations of resilient US economy: Poll

economictimes.indiatimes.com:

FX strategists polled by Reuters. Although the greenback is still down around 0.5% against major currencies this year, it has gained nearly 1.3% over just the past week thanks to receding calls for a federal funds rate cut and wilting expectations for a U.S. recession this year.

Several U.S. Federal Reserve officials, including Chair Jerome Powell, have argued in favour of at least two more rate hikes, against market expectations of one more, which also helped underpin the currency. The dollar will not give up those recent gains anytime soon, according to the June 30-July 5 poll of 80 FX strategists despite some major central banks, like the European Central Bank and Bank of England, set to keep raising rates for longer.

«The tightness of the U.S. labour market may help the economy and the dollar in the very short term,» said Kit Juckes, chief FX strategist at Societe Generale. «Even if we see (interest) rate convergence, it seems unlikely a new major euro uptrend will start without stronger growth.» Indeed, a majority of common contributors showed the dollar view against most major currencies for the coming six months has been either upgraded or kept unchanged from a month ago.

Meanwhile, net USD short positions have eased since hitting a two-year high in May, according to data from the Commodity Futures Trading Commission. Recent data showed the world's largest economy has remained stronger than expected and has fared better than the euro zone, which slid into a recession earlier this year. «We see room for a dollar rebound in the near term.