Daily Spotlight

Forecast Trading Range for Dollar in 2019

The dollar rose almost 7% in 2018 and is again approaching cycle highs set in 2001-2002 and again in late 2016. The dollar strength reflected several factors, including the Fed's rate-hike campaign and above-trend GDP growth in the U.S. in 2Q and 3Q (the 4Q rate has not been published yet due to the government shutdown); global concerns over Brexit, which has not yet been resolved; economic weakness in Germany; and high debt levels in Italy. Looking ahead, we anticipate a trading range around current levels for the greenback this year. That's because we think U.S. GDP will cool in the first half and the Fed has gone on record indicating it has no current plans to raise interest rates in 2019. Meanwhile, we expect the uncertainty surrounding Brexit to be lifted later in March, in advance of the deadline, if only to give negotiators more time to figure out the best path for the split. Lastly, the lofty current valuation of the greenback implies that other currencies are likely undervalued, and traders can be expected to bid up those values over time. ...  Meanwhile, we expect the uncertainty surrounding Brexit to be lifted later in March, in advance of the deadline, if only to give negotiators more time to figure out the best path for the split. Lastly, the lofty current valuation of the greenback implies that other currencies are likely undervalued, and traders can be expected to bid up those values over time.    more

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