18 Dec 2014
US dollar rally set to extend further - BTMU
FXStreet (Guatemala) - A collective of analysts at The Bank of Tokyo-Mitsubishi UFJ, Ltd. explained that the US dollar is set to record its’ strongest performance in a calendar year since 1997
Key Quotes:
"...the US dollar is set to record its’ strongest performance in a calendar year since 1997 according to the Federal Reserve’s trade-weighted index against a basket of major currencies which has increased by around 10% so far in 2014".
“The case for a stronger US dollar is built on firm fundamental foundations. The divergence in economic performance and monetary policy between the US and the rest of the world is expected to widen further in the year ahead”.
“The sharp drop in the price of crude oil will help to strengthen US consumer spending, which will also benefit from strong employment growth, a pick-up in earnings growth as the labour market tightens, and improving consumer confidence which has returned to prefinancial crisis levels”.
“We expect the Fed to begin raising rates from the middle of 2015 increasing the relative appeal of the US dollar”.
“As a large and closed economy it is likely that negative developments overseas will have only a limited effect on the US. Even if the sharp drop in the price of crude oil allows the Fed to delay rate hikes for a little longer, it is unlikely to materially weaken the case for a stronger US dollar”.
“US dollar strength could even exceed current expectations which are relatively conservative. The latest Bloomberg consensus forecasts expect the US dollar to increase only modestly against the other major currencies in 2015”.
“EUR/USD is expected to fall to 1.1800, USD/JPY to rise to 125.00, GBP/USD to fall to 1.5500, USD/CAD to rise to 1.1700 and AUD/USD to fall to 0.8000. All of those forecasts are within +/- 5% of the current spot rate which appears conservative especially if foreign exchange market volatility continues to increase in 2015 as we expect”.
Key Quotes:
"...the US dollar is set to record its’ strongest performance in a calendar year since 1997 according to the Federal Reserve’s trade-weighted index against a basket of major currencies which has increased by around 10% so far in 2014".
“The case for a stronger US dollar is built on firm fundamental foundations. The divergence in economic performance and monetary policy between the US and the rest of the world is expected to widen further in the year ahead”.
“The sharp drop in the price of crude oil will help to strengthen US consumer spending, which will also benefit from strong employment growth, a pick-up in earnings growth as the labour market tightens, and improving consumer confidence which has returned to prefinancial crisis levels”.
“We expect the Fed to begin raising rates from the middle of 2015 increasing the relative appeal of the US dollar”.
“As a large and closed economy it is likely that negative developments overseas will have only a limited effect on the US. Even if the sharp drop in the price of crude oil allows the Fed to delay rate hikes for a little longer, it is unlikely to materially weaken the case for a stronger US dollar”.
“US dollar strength could even exceed current expectations which are relatively conservative. The latest Bloomberg consensus forecasts expect the US dollar to increase only modestly against the other major currencies in 2015”.
“EUR/USD is expected to fall to 1.1800, USD/JPY to rise to 125.00, GBP/USD to fall to 1.5500, USD/CAD to rise to 1.1700 and AUD/USD to fall to 0.8000. All of those forecasts are within +/- 5% of the current spot rate which appears conservative especially if foreign exchange market volatility continues to increase in 2015 as we expect”.