United States Dollar - Recent Performance
The dollar began November close to multi-month highs. Major dollar rates include EUR/USD, which ended the first session of the month at 1.162, down nearly 4% on levels in early September, and USD/JPY, which stood at 114.18, up 6.4% from September’s low. The US Dollar Index stood at 94.85.
The dollar’s September-October rally was a welcome change from its near-12% fall in the January-August period.
Long-term dollar sentiment remains downbeat.
In the expert opinion of ABN Amro, Saxo Bank and others, Donald Trump’s proposed tax cuts are either unlikely to make it through Congress or won’t have the reflationary effect that investors are hoping for. Furthermore, if Jerome Powell is named as the next Chair of the Federal Reserve, as is rumuored, he is likely to follow his predecessor’s footsteps by proceeding cautiously on interest rate rises, which may disappoint dollar traders.
In late October, Credit Agricole added its name to a growing list of banks predicting difficult times ahead for the dollar. The bank said that the currency’s September-October rebound was “unlikely to extend much further.”
Earlier in October, Saxo Bank predicted that the dollar would “top out” in Q4 and “continue its longer-term decline.”
In September, ABN Amro expressed “strong conviction” on future dollar weakness and Nomura reaffirmed its “structural bearish view.”