US Dollar Forecasts 2021

In September, Olaf Scholz’s Social Democrat Party narrowly won the German election. The longer negotiations and political uncertainty drag on, the greater downward pressure will be felt by the euro.

In addition should risk sentiment remain fragile, there could be continued demand for USD as a safe haven. Therefore, USD/EUR could gain higher.

In early September, AUD broke 0.74 USD, however due to erosion in risk sentiment sparked by the Evergrande crisis, then steadily declined toward 0.72 USD.

Despite the pessimistic outlook there OFX see an opportunity should there be any uptick in global risk sentiment, accelerating a broader AUD rebound towards 0.75 USD.

Into October, broader risk sentiment is driving direction for commodity currencies like the loonie. If the global equity volatility eases, we could see domestic data take the front seat in driving the currency direction.

OFX predict the USDCAD pair could trade between 1.24 – 1.29 CAD in October.

The pound sunk in September to 1.34 against the greenback but has recovered into October near 1.36 after Boris called the army out to drive the fuel trucks.

The outlook for the pound for October is very uncertain due to rising inflation, slowing growth and unemployment, the combination of which could create a nightmare scenario for the Bank of England Monetary Policy Committee.

OFX predict the GBP could range between 1.33 – 1.38 USD in October.

The US dollar surged to 6-Month Highs against the Mexican peso in October as as bond yields have risen sharply on predictions the US Fed will start tapering (cutting back on Bond purchases).

But the peso was not alone as most other Latin American currencies dropped as the dollar strengthened.

The rupee weakness in September has continued into October dropping from 73 to 75 per USD, after powering ahead in late August gaining almost 2% as speculation grew that the central bank was relaxing its control over the currency. USD-INR Outlook

In September, the JPY traded within recent ranges of 109 – 111 JPY until the last week of the month.

Continued market volatility could support a lower USDJPY in October and the expectation that potential Prime Minister Kishida will maintain current monetary policy could also pressure the yen lower.