Search ForexCrunch
  • Reuters poll-risks to dollar forecasts skewed more to the downside in the next six months, 29 of 50 strategists say.
  • Reuters poll-safe haven currencies likely to benefit from worries about US-China tensions, over 70% of 57 analysts say.

At the time of writing, the DXY is trading back where prices were agreed between around the hight of the 2018s and for a large part of the 2019s. Historically, these levels in the 97 handle have been pivotal which makes for a compelling analysis in this particular time as nations seek to progress out from the grip of the coronavirus. 

Reuters have published a piece which notes that fading of the US dollar’s allure and argue that it will continue as global funding strains ease. 

However, Reuters has conducted a poll and have stated that a majority of analysts polled by Reuters said there was a high risk that the US-China trade standoff will renew safe-haven bets in the next six months.

Key notes

Most major and emerging market currencies have rallied against the greenback. The U.S. dollar index .DXY is down about 5% from a March peak, when panic over the coronavirus pandemic gripped financial markets.

World shares hit three-month highs on Wednesday as monetary and fiscal stimulus have given traders confidence, despite expectations for a slow economic recovery, growing concerns over U.S.-China tensions, U.S. civil unrest and rising coronavirus infections.

Those risks usually are a recipe for dollar strength but the June 1-3 poll of over 60 analysts predicted the greenback’s losing streak would continue on expectations most major central banks would carry on buying government bonds and other financial assets. 

A slight majority, 29 of 50 analysts, said in response to an additional question that risks were skewed more to the downside for the dollar over the next six months.

In a separate question, more than 70% of 57 analysts said the risk was “high” that the U.S.-China standoff would renew bets in favour of safe-haven currencies over the next six months.

International rates to borrow dollars on cross-currency basis swaps, which were extremely high in mid-March, have hit low levels, with the latest euro-dollar three-month swaps rate suggesting it has become more costly to borrow the euro instead.