U.S. dollar's strength to persist as markets eye cautious Fed
By Hari Kishan and Sarupya Ganguly
BENGALURU (Reuters) -A strong U.S. dollar will maintain the status quo in the near term, as markets brace for a risk the Federal Reserve's first interest rate cut gets delayed to the second half of this year, according to a Reuters poll of foreign exchange strategists.
Shrugging off a weakening trend late last year, the dollar has gained against nearly every currency tracked by traders and investors, and is up nearly 2.5% for the year.
Much of the greenback's recent strength is based on stronger-than-expected U.S. economic performance and receding calls for early Fed rate cuts. The timing of the latter is likely to have a bigger say on the currency's moves in the near-term.
«Over the next three months, I think we're probably going to see the dollar hold in the ranges we've been seeing since the start of the year,» said Shaun Osborne, chief currency strategist at Scotiabank.
«If we're in a situation where instead of the soft landing, it's a no-landing scenario, that potentially reduces rate cut opportunities for the Fed quite significantly over the balance of this year, in which case the dollar probably stays relatively strong.»
Despite trader positioning data showing speculators increasing their net long dollar bets to the highest since last November, analysts in a Reuters March 1-6 poll were somewhat divided on how positioning will look over the next three months.
Among 66 analysts who answered an additional question, a slim majority of 35 expected not much change, while 17 predicted a decrease in net longs. Eleven said an increase in net longs and only three said a reversal to net shorts.
«One thing that's happened this year is investors have had a hard time playing with the dollar
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