38 securities companies were surveyed by Bloomberg about their vision of the U.S. dollar’s future. After dollar lost more than 11% against euro this year, majority of the strategists are sure that the next year will be marked with the dollar rebounding versus major world currencies.
As the U.S. trade balance deficit narrows at a record high pace, the dollar value should increase, because the lower the deficit is the less foreign currency U.S. companies need to buy. And with lower demand for euro and other currencies and lower offer of dollars, EUR/USD is doomed to fall soon.
Another reason which makes Forex analysts to judge in the dollar’s favor is a quite low U.S. budget deficit ($162.8 billion compared to $413 in 2004). The Treasury Secretary Henry Paulson said that having a strong currency is in the U.S. national interest and that the dollar’s value will reflect the long-term strength of economy.
Among those who think that dollar will continue its downfall next year are Citigroup, Merrill Lynch, ABN Amro, Nova Scotia, Warren Buffet and Bill Gross. Their forecasts are founded on the high probability of further interest rate cuts by Federal Reserve and the decreasing dominance of U.S. in economic and political spheres.
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