BENGALURU- After a recent spill, the dollar looks a bit rudderless, waiting for direction on US monetary policy, according to foreign exchange strategists polled by Reuters who predicted the currency will have ceded more ground 12 months from now.
Having fallen from a 15-week high set a fortnight ago, the dollar is still up over 2 percent for the year, although that gain is expected to be erased within 12 months.
“The base presumption is…fairly rangebound from here, but it entirely depends on what we see happening in terms of fiscal or monetary policy,” said Michael Every, global strategist at Rabobank. “This is where FX forecasting becomes something of a joke: you’re forecasting one thing based on another thing.”
At its July meeting, the Fed offered no clear path on when it would begin to taper its $120 billion in monthly asset purchases. Markets are looking to the annual meeting at Jackson Hole that the Fed will host later this month for any hints.
The Aug 2-4 poll of over 60 foreign exchange strategists showed expectations for the dollar to weaken against most major currencies in 12 months, a broad view they have held for over a year.
When asked how confident they were in that weaker dollar outlook, a strong majority of 39 of 62 – over 60 percent – said they were not confident or not at all confident. The remaining 23 said they were either confident or very confident. – Reuters
