Monday, July 11, 2011

The leading Experts about the US Dollar this Year

The most accurate currency forecasters have different opinions on the future of US dollar which has lost 13% during the past year.

There are dollar-optimists who project the greenback to stop declining as the demand for it is likely to increase due to the euro zone’s debt concerns. In addition, the greenback may be supported by the fact that QE3 in the US seems to be unlikely.

Strategists at Schneider Foreign Exchange expect US currency recover to $1.40 by the end of 2011. In their view, the risk of a disorderly default in Europe is currently much higher than in the United States. Wells Fargo economists say that dollar may appreciate to $1.39 by December 31, while Credit Agricole sees dollar to end the year at $1.30.

Analysts at HSBC remind that dollar is still the reserve currency of the world and will be for some time to come, so it won’t continue depreciating. According their forecast, the pair EUR/USD will finish the year at $1.44.

The main dollar-negative factors are concerns about the weakness of US economy and US debt. Analysts at Bank of Nova Scotia underline that there’s no credible fiscal plan in the United States.

Strategists at Societe Generale believe that dollar will fall to $1.50 by the end of the third quarter and to $1.52 per euro by year-end. The specialists point out that US favors a weaker currency for the sake of economic growth encouragement. In their view, as long as unemployment remains high the Federal Reserve will keep its monetary policy extremely loose. JPMorgan thinks American currency will weaken to $1.48 by the year-end.

All in all, despite some negative opinions the overall sentiment about the greenback has significantly improves.

Analysts at Wells Fargo note that the safest strategy is to stay long on USD/JPY. In their view, by the end of the fourth quarter there will be a shift in interest-rate futures positive for US dollar.

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