Commerzbank’s Antje Praefcke thinks that the Dollar is hard to beat as markets await a peace agreement and clarity on US politics and inflation. The USD is being supported by strong US data and hawkish FOMC rhetoric, but she is skeptical of much more gains. She believes that more sustained dollar gains toward 1.10 are improbable, although EUR/USD might return to 1.13.
Fed uncertainties limit the strength of the dollar
"Because I think that if US economic data comes in good, expectations for a US interest rate hike by the end of the year will be kept alive for the time being - and this, together with hawkish statements from various FOMC members, would strengthen the USD."
"I still do not think the US dollar has much more room to grow. After all, the data would need to be genuinely remarkable and surprise on the upside overall in order to price in additional rate hikes. That is unlikely, in part because of the shock to energy prices.
"Certainly, we might see EUR/USD go toward 1.13 again - especially if tomorrow’s US employment report comes in stronger than expected and strengthens confidence that the labor market has overcome its collapse from the fall."
"But I find it hard to envisage further gains toward 1.10 in the absence of new, truly definitive facts."
"We see potential for a decline in the dollar because we have our doubts about this."
Fed uncertainties limit the strength of the dollar
"Because I think that if US economic data comes in good, expectations for a US interest rate hike by the end of the year will be kept alive for the time being - and this, together with hawkish statements from various FOMC members, would strengthen the USD."
"I still do not think the US dollar has much more room to grow. After all, the data would need to be genuinely remarkable and surprise on the upside overall in order to price in additional rate hikes. That is unlikely, in part because of the shock to energy prices.
"Certainly, we might see EUR/USD go toward 1.13 again - especially if tomorrow’s US employment report comes in stronger than expected and strengthens confidence that the labor market has overcome its collapse from the fall."
"But I find it hard to envisage further gains toward 1.10 in the absence of new, truly definitive facts."
"We see potential for a decline in the dollar because we have our doubts about this."
