U.S. dollar’s strength to persist as markets eye cautious Fed By Reuters

© Reuters. 4 thousand U.S. {dollars} are counted out by a banker counting foreign money at a financial institution in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking/File Photograph

By Hari Kishan and Sarupya Ganguly

BENGALURU (Reuters) -A powerful U.S. greenback will keep the established order within the close to time period, as markets brace for a danger the Federal Reserve’s first rate of interest minimize will get delayed to the second half of this yr, in accordance with a Reuters ballot of international alternate strategists.

Shrugging off a weakening development late final yr, the greenback has gained towards practically each foreign money tracked by merchants and buyers, and is up practically 2.5% for the yr.

A lot of the buck’s current power is predicated on stronger-than-expected U.S. financial efficiency and receding requires early Fed charge cuts. The timing of the latter is prone to have a much bigger say on the foreign money’s strikes within the near-term.

“Over the following three months, I feel we’re in all probability going to see the greenback maintain within the ranges we have been seeing because the begin of the yr,” mentioned Shaun Osborne, chief foreign money strategist at Scotiabank.

“If we’re in a state of affairs the place as a substitute of the gentle touchdown, it is a no-landing situation, that probably reduces charge minimize alternatives for the Fed fairly considerably over the steadiness of this yr, wherein case the greenback in all probability stays comparatively sturdy.”

Regardless of dealer positioning information displaying speculators growing their internet lengthy greenback bets to the best since final November, analysts in a Reuters March 1-6 ballot have been considerably divided on how positioning will look over the following three months.

Amongst 66 analysts who answered a further query, a slim majority of 35 anticipated not a lot change, whereas 17 predicted a lower in internet longs. Eleven mentioned a rise in internet longs and solely three mentioned a reversal to internet shorts.

“One factor that is occurred this yr is buyers have had a tough time taking part in with the greenback they usually’re searching for trades that…take the greenback out of it. I feel that is the way in which it should proceed to lean,” mentioned Dan Tobon, head of G10 FX technique at Citi.

“Over the approaching three months, we’ll have a slightly weaker greenback, however not get the kind of flows that actually create stretched positioning conditions off the again of that.”

Whereas foreign money strategists nonetheless anticipated the buck to weaken towards most main currencies over a 12-month interval, median forecasts confirmed no massive change to analysts’ predictions from a February ballot.

The euro, down round 1.5% for the yr, was forecast to achieve 3.0% to commerce round $1.12 in a yr. The frequent foreign money was final altering arms round $1.09 on Wednesday.

Even the battered Japanese yen, which has misplaced practically a 3rd of its worth since 2021, was anticipated to achieve over 9.0% in 12 months to commerce at 137.00/greenback.

After failing to make any headway towards the buck in 2023, the and {dollars} have been predicted to achieve round 7.3% and 5.0% respectively, recouping their 2024 losses and buying and selling greater towards the U.S. greenback in coming months.

The Australian greenback and the New Zealand {dollars} – final buying and selling round $0.65 and $0.61, respectively, on Wednesday – have been forecast to rise to $0.70 and $0.64 by end-Feb.

(For different tales from the March Reuters international alternate ballot:)