We expect the US dollar will appreciate further

We think that the US dollar will continue to trend higher through the end of this year as commodity prices fall further and long-term government bond yields increase by more in the US than elsewhere.
Jonas Goltermann Senior Markets Economist
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FX Markets Weekly Wrap

COVID throws another curveball

News late yesterday of a new and potentially more dangerous variant of COVID-19 emerging in South Africa has made a dramatic impact on financial markets today. In general, market shifts have been similar to those in previous periods of renewed uncertainty around the path of the pandemic. Risky assets and currencies have fallen across the board today, while bond yields have dropped sharply and safe havens – notably the yen – have rallied. Short-term rate expectations, which had risen significantly in the US and other DMs over recent months, have been pared back rapidly.

26 November 2021

FX Markets Weekly Wrap

Continued dollar rally looks increasingly likely

The US dollar is set to end another week higher against nearly all major currencies. To a large extent, this latest rally appears to be driven by the rise in short-term government bond yields in the US relative to other major economies, notably the euro-zone. And today’s news about renewed lockdowns in parts of Europe has reinforced growing concerns about the pace of the global economic recovery. Given our view that global growth will continue to slow and inflationary pressures in the US will prove more sustained than widely anticipated, the backdrop remains favourable for the dollar to strengthen further. Indeed, the minutes of the FOMC’s last meeting (due Wednesday) could lend support to this view.

19 November 2021

FX Markets Chart Book

US dollar bull market might just be getting started

The dollar has risen to its strongest level in more than a year and, though it is not our central forecast, we think the risk of a more sustained dollar bull market is increasing.

19 November 2021

More from Jonas Goltermann

FX Markets Weekly Wrap

Dollar rally reverses on dovish Powell; payrolls coming up

The US dollar gave back much of its gains from last week, as appetite for risk recovered and Chair Powell’s much-anticipated speech today provided some relatively dovish guidance on the path for Fed interest rate hikes. Nonetheless, we think that this will prove a temporary setback, and that the greenback will appreciate a bit further in final months of the year as the prospects for Fed policy normalisation improve and US bond yields rebound by more than those in other major economies.

27 August 2021

FX Markets Update

Our views on the US dollar’s long-term prospects

Although we forecast the greenback will rise further over the next year or two, we think that it will face growing headwinds over the longer term. In view of the wider interest, we are also sending this FX Markets Update to clients of our Long Run Service

26 August 2021

FX Markets Weekly Wrap

Dollar rally continues as Jackson Hole approaches

The US dollar has risen sharply this week, reaching its highest level of the year as continued fears about the spread of the “delta” variant and further evidence of growing risks in China (around its economic slowdown, the widening regulatory crackdown on major tech firms, and concerns about its opaque financial system) have weighed on risk appetite and increased demand for safe havens. While we continue to forecast a robust economic recovery, the near-term risks in financial markets appear skewed to the downside, which may well continue to support the greenback.

20 August 2021
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