USD: Losing steam ahead – CIBC
24.12.2019, 15:40

USD: Losing steam ahead – CIBC

Analysts at CIBC expect the U.S. Dollar Index (DXY) to move lower over the next quarters, forecasting DXY at 95.5 in Q1 and at 93.4 in Q3 of next year.

  • "The US dollar has managed to rally in the past year, despite a dose of Fed rate cuts and an adverse current account balance that protectionism has not addressed. After what looks to be a softer Q4 pace, the US looks poised to pick up in early 2020 on improved interest-sensitive demand, particularly in housing. That should see the Fed put away the rate cut tool for good, which on its own would be supportive for the dollar. But we see that overridden by a gradual reduction in global uncertainty over the course of the coming year, which will lean towards a partial reversal of some of the flight to safety gains for the dollar.
  • We enter the year with a US-China trade deal waiting to be tested, lingering uncertainties over post-Brexit UK-EU trade talks, and pockets of overseas economic weakness still evident. The lagged impacts of earlier monetary stimulus, clarity on some of the trade files over time, and fiscal stimulus in Japan, and potentially down the road in Europe, could see the world exit 2020 with an improving tone overseas. That risk-on environment should allow recoveries for the euro and Sterling, and superior current account balances in Europe and Japan should also favour their currencies against the dollar."

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