Dollar to stay bright this year before fading in 2024

Dollar to stay bright this year before fading in 2024

The dollar’s strength will be difficult to overcome for most major currencies by year-end, according to a Reuters poll of forex strategists who said the risks to their greenback outlook were skewed to the upside.

Backed by a strong economy and rising U.S. Treasury yields, some of the highest among developed economies, the dollar despite bouts of weakness has stayed resilient against most major currencies.

Hitting a six-month peak as jitters over China and global growth weighed on risk appetite and expectations the U.S. Federal Reserve will hold interest rates higher for longer, the safe-haven dollar recovered almost all of its mid-year losses and is now up over 1% for the year.

That strong performance has brought the long-held view of a weaker dollar in the short to medium term under review.

A solid 81% majority of analysts, 43 of 53, who answered an additional question said the risk to their dollar outlook was to the upside, the Sept. 1-6 Reuters poll showed.

“We think dollar strength has got further to run and will sustain over the next three months,” said Jane Foley, head of FX strategy at Rabobank.

But the dollar was expected to have weakened modestly against most major currencies in a year, according to the median view of around 70 foreign exchange strategists, with the bulk of it coming next year as the first Fed interest rate cut comes closer.

“In the next six to nine months, we are expecting the Fed to start to cut rates and it’s at that point where we think that the dollar will re-weaken again,” said Lee Hardman, senior currency analyst at MUFG.

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