Will the dollar's strong trend continue?
While recent inflation data from the US has created a spring-like atmosphere in the markets, it has also brought the future course of the dollar to the agenda. Many institutions, from T. Rowe Price to Fidelity International, expect the dollar to maintain its strength.
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According to some high-profile investors, including T. Rowe Price and Fidelity International, it may be too early to say that the end of the dollar's rise has arrived.
According to T. Rowe Price, expectations that the Fed will cut interest rates next year are exaggerated, and growth in the US and higher interest rates compared to other major economies will continue to support the dollar.
Tim Murray, Capital Markets Strategist at the firm, said, “I don't expect the Fed to cut rates in 2024. For the dollar to experience a ‘significant decline,’ that would need to happen.”
Fidelity International also believes that long-standing high US interest rates carry the risk of dragging the economy into a downturn that would benefit the US currency.
George Efstathopoulos, Portfolio Manager at Fidelity International, said, “I don't think we can say ‘the end of the dollar bull market has arrived.’ We are reducing our overall local currency positions partly to reflect this view.”
Charlotte Ong from HSBC also stated, “The current weakness in the dollar is consistent with the pricing of further easing by the Fed, but other G-10 currencies will also feel the heat as markets price in a similar dovish pivot for their own central banks. Entering 2024, we maintain our view on the resilience of the dollar, especially in the face of soft global growth and relatively strong US yields.”