The dollar will resume its upward climb in the coming year, but extreme near-term moves in either direction are possible, driven more by U.S. President Donald Trump’s expected fiscal stimulus than by his words, a Reuters poll found.
After mostly gaining over the past three years, the dollar hit a wall in January, marking its biggest losses in percentage terms in three decades on concerns about the Trump administration’s preference for a weak dollar and a radical policy on immigration.
In 2016, the dollar was down less than one percent until the U.S. election on Nov. 8. It then reversed course to end the year over 4 percent higher, something FX strategists polled by Reuters had not predicted before the vote.
Instead, they had said the dollar was likely to fall in the immediate aftermath if Trump were to win.
So far this year, concern over U.S. President Donald Trump’s attitude to the dollar, global trade and security has pushed the currency down over 2 percent, and has led to declining Treasury yields as well.
Speculators have also cut bets in favor of the dollar for the fourth straight week. Net long positions fell to their lowest since last October, according to data from the Commodity Futures Trading Commission and calculations by Reuters.
Still, the latest poll of more than 60 FX strategists, taken over the past week, showed the bias was still towards a stronger dollar over the coming year once the fog clears around the White House’s tax and spending plans.
Six of the top 10 most accurate forecasters in Reuters polls last year are still forecasting dollar gains against most major currencies.
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