Reuters held its traditional survey among currency strategists regarding the forecast of the dollar and other currencies in 2018.
The main conclusion of the analysts is that the tax reform in the United States would have uncertain consequences for U.S. currency. For this reason, the forecasts for the dollar became more moderate in comparison with the estimates that were made a few weeks ago.
«As for the impact of the approved tax reform (to the dollar), the analysis shows that in the best case in the short term will be a small positive economic impact that could help to keep the trend of the weakening of the dollar against the currencies observed in most countries of the G10 in 2017,» says Roberto Cobo Garcia, a strategist at BBVA.
The forecast for the Euro was the strongest for the past three years, notes Reuters.
The Agency reminds that the dollar has lost about 9 percent against a basket of six major currencies this year and this is the worst year for the U.S. currency in 14 years.
According to the median forecast of the Euro will rise to 1.22 dollars per 12 months. Analysts at BBVA, which ranks third among the top forecasters by Reuters, agreed with this assessment.
The analysts of ING Financial Markets, also included in the top ten most accurate forecasters expect the Euro will rise for the year to 1.30 dollar.
These estimates are based on the European Central Bank completes its asset purchase program by the end of next year, which will lead to the strengthening of the European currency.
Even those analysts who believe that the tax reform will support the dollar put in its weakening against the Euro. Although earlier, Reuters reports, some strategists even expect that the dollar will reach parity with the Euro by the specified factor. Now such predictions no one does.
An analyst at Societe Generale Keith Jukes noticed that the last peak of the dollar was the lowest of the three peaks since 1980. He explains that the yield of US Treasury securities is at historic lows.
To justify the rise in the dollar, bonds should significantly improve profitability, believe in Societe Generale. SocGen predicts that the dollar will fall another 10 percent from current levels.
According to the latest data of the Commission on trade in commodity futures, currency speculators have increased their net short dollar positions to the highest level in a month. Until greater clarity on tax reform downward pressure on the dollar may persist, concludes Reuters.