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#1 14-02-2019 14:34:32

johnedward
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USD: The dollar's potential to decline in 2019 seems limited (Westpac)

USD: The dollar's potential to decline in 2019 seems limited (Westpac)


http://www.forex-central.net/forum/userimages/Logo-Westpac.png


Westpac analysts note that the US dollar (DXY) is only slightly below the 97.4 peak reached in 2018, at 97.1 (-0.3%), and that the underlying momentum of the US economy in 2019 is unquestionably strong.

"We expect the US economic momentum to continue into 2019, and we expect the US data to justify 2 further FOMC rate increases in June and September. This will reduce the federal funds rate to the center of the "neutral" range defined by the Committee, and bring the DXY to a peak of 98.6 in September 2019. However, according to market expectations, the risks associated with this vision of interest are biased to the downside given current accounts, the potential return of US tax concerns and the current prudent FOMC policy approach.

That being said, as short-term risks are more pressing for other countries than for the United States, the bearish profile of the US dollar by the end of 2019 seems limited.

By 2020, however, a clear downward trend of the DXY - with a return to around 92 - is expected, while global risks are easing, the FOMC confirms a halt in rate increases to 2.875% and interest rate hikes appear to be back on the agenda over in Europe.
"


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