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Bloomberg predicts USD growth in 2017

Currency trader Mark Cudmore, a former FX trader, has stated that although a majority of experts are sure of the strengthening of the dollar in 2017, a scenario will fail to meet the expectations, as described in his materials for Bloomberg.

07.Dec.16 3:25 AM
By Anna Tuzova


Bloomberg predicts USD growth in 2017
According to Cudmore, the last two weeks he spent in New York, where he has been watching the financiersí behavior. Local representatives of the financial market share the opinion that in the next year the American currency would grow in the next year against a background of increase interest rates provided by the US Federal Reserve Board. According to them, the FRB may do this because of the growing inflation and the inflationary expectations, which has surged after the Trumpís election as the USAís president. 

But at the same time Cudmore thinks that financiers havenít took into consideration the important point: the strong dollar is a serious barrier to consumer price inflation, and its growth may on the contrary cause the deflationary pressure. Rate hikes might eventually be meaningless.

Itís noted that today, the strong dollar eating up 44 per cent of profit of companies from S&P 500 index every day.  Moreover, the strong American currency might widen a Current Account deficit, which would reflect negatively on the exchange rate further.

According to Cudmore, although the dollar has been growing 60 per cent per annum since the election, itís naive to assume that this pace would continue.

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