Live Markets: The mighty dollar's comeback

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15/02/2024 13:29

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    THE MIGHTY DOLLAR'S COMEBACK
    This year started with investors widely expecting U.S. rate
cuts and a weaker dollar. But robust economic growth and
elevated inflation have caused this consensus to collapse.
    Societe Generale FX strategist Kit Juckes, who in January
tipped the euro to strengthen against the dollar to $1.16 this
year, compared with $1.0747 right now, admits in a research note
that his 2024 forecast is now “under attack.”
    Weak fourth-quarter GDP prints for the euro zone and the UK
mean the European Central Bank and the Bank of England “need to
get on with rate cuts sharpish, and the Fed has no reason to
hurry, perhaps no reason to cut at all,” Juckes writes.
    “It all screams ‘strong dollar’ and laughs in the face of FX
forecasts – notably ours, which are the only ones I care about.”
    Further strong U.S. growth could raise inflation, Juckes
adds, potentially meaning “the Fed will eventually have to
tighten again and the dollar will rally.”
    Juckes notes that while growth in the Euro zone, the UK and
Japan is improving, “if the Fed’s next move is to hike rates,
that changes everything.”
    (Naomi Rovnick)
    *****
    
    FOR THURSDAY'S OTHER LIVE MARKETS POSTS:
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INCREASES CLICK HERE
    GLITTERING RESULTS TO LIFT EUROPE AT THE OPEN CLICK HERE
    ASIA TECHS BASK IN NVIDIA AFTERGLOW CLICK HERE

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