The firm argues that lower rates aren't going to bring the dollar lower
According to a report by the firm's strategists, they see that weakening yields in the US will not pose a problem for the dollar as they expect the greenback "to stay stronger for longer". In turn, they are revising lower their aussie and kiwi forecasts citing:
"The read-through from an expected weaker CNY trend in the coming months to broader EMS, AUD and NZD is profound."
On the dollar, the firm says that even if Trump orders the Treasury to engage in FX intervention, the unilateral nature of such action renders it unlikely to have more than a temporary impact in markets.
Here are the firm's revised forecasts:
- AUD/USD seen at 0.67 by September 2019 (previously 0.71)
- AUD/USD seen at 0.65 by December 2019 (previously 0.73)
- AUD/USD seen at 0.70 by December 2020 (previously 0.76)
- NZD/USD seen at 0.64 by September 2019 (previously 0.67)
- NZD/USD seen at 0.62 by December 2019 (previously 0.68)
- NZD/USD seen at 0.65 by December 2020 (previously 0.71)
- USD/JPY seen at 105 by September 2019 (previously 107)
- USD/JPY seen at 104 by December 2019 (previously 108)
- USD/JPY seen at 106 by December 2020 (previously 105)
