The dollar really has rallied and it has gone up by over 6% so far. It fell to a year-long low and the US Federal Reserve is now apparently back on track. This means that they are going to raise interest rates and this is going to be done on the back of a very robust economic indicator. The US dollar really is a major buy and at the moment it is safe to say that it is unstoppable. This is especially the case if you listen to the US Chief of Currency for HSBC.
David Bloom has stated that nothing can stop the dollar and he has also stated that the dollar is back as well. Bloom has also stated that the Federal Reserve is back on track to try and raise the interest rate as well and this is going to be done as a fair amount. He has also come out to say that nothing he can imagine would stop the FED in the next couple of weeks and this is especially the case with the ECB doing their meetings. He believes that you have the diversity of the monetary policy and this is one of the engines of growth that is driving the whole thing ahead. He has stated that this all combined is just one of the reasons why the dollar is not going to slow down anytime soon.
The dollar has also rallied by more than 6% over the last couple of weeks. The bullish outlook is certainly not good and it does indicate that it is going to be another weak year for the dollar as well. This is especially the case when you take a look at companies and lenders such as Goldman Sachs and the fact that they have also stated that the greenback is soggy when compared to the other currencies that are available. HSBC has actually come out to argue against this and they have said that the cynical factors really are causing problems. They have also stated that it is not the structural factors that are driving the USD down. In the last few months alone, US jobs and even wages have continued to exceed expectations and this is going to carry on pushing up inflation as well. This in turn, is also going to increase the likelihood that the FED are going to match their dots.
While the FED is going to carry on tightening their policies, there are a lot of other companies around the world who are hesitant about this. This is especially the case when you look at Europe. In the face of softening growth numbers and even political uncertainty really does come from major companies such as Italy and even Spain. The central bank looks to have their hands tied when it comes to the bigger picture but only time will tell if this is really the case.
The US economy happened to add well over 220,000 jobs and this is especially shocking when you think about the estimated increase only being around 190,000 jobs. Of course, the unemployment rate also fell to its lowest rate in over 18 years and now only 3.8% of people are unemployed in the US. The FEDs policy really does indicate that the interest rate is going to hike this year and this has already improved the outlook of the greenback. As HSBC is way more bullish, especially when you look at the greenback, the positioning for the dollar is questionable to say the least. The downside risk of this include the fact that there could now be more trade tensions and this could throw a metaphorical wrench into the forecast. A lot of other economists have also said that the buck’s rally really is unsustainable and that there isn’t going to be much focus on the climbing debt. Bloom has come out to dispute this and this is especially the case when you look at negative drivers for the dollar are only really to do with the price. It does seem like the fears to do with the trade war are somewhat overblown and there isn’t going to be much else that comes from this.
The Donald Trump Administration has announced that they are going to be imposing over 25% tariffs on things like steel and even aluminium as well. This is especially the case if you have imports coming from countries such as Canada, Mexico and even the European Union as well. This is coming after they have imposed similar tariffs on the rest of the world, however. Negotiations are also very much underway. That being said, the rise of the dollar has taken many people by surprise. This includes Bloom, and it does come with some risks of its own. A strengthening dollar has put a ton of pressure on the emerging markets and it has also brought around a ton of debt as well. This threatens to bring around a huge level of global recession, very quickly and this is alarming to say the least. That being said, only time will tell if this whole thing is going to come into place or not anytime soon.