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What analysts thinks of the US dollar
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Loading...Why this analyst thinks the US dollar will actually strengthen going forward.
David Forrester, the bank's FX strategist told CNBC Monday that markets have been predominantly focused on U.S. inflation data and pricing in an overly cautious Federal Reserve. But, he thinks the Fed will be more hawkish than what is currently expected, which will support the U.S. dollar.
Credit Agricole expects the Fed to hike rates once more this year, followed by three times in 2018. U.S. inflation — still below its 2 percent target despite a low unemployment rate — has been a key point in the argument on whether the Fed should continue normalizing rates.
Forrester said the divergence between the unemployment rate and inflation is not unique to the U.S. Globally, economies face structural issues such as ageing populations and automation replacing jobs, which could increase the risks of a recession.
"We expect the U.S. economy to continue to recover and strengthen. We do expect wages growth to accelerate and inflation expectation(s) to pick back up.
Forrester's views are in contrast to that of many analysts, who expect weakness in the U.S. dollar. Ken Peng, Asia investment strategist at Citi Private Bank, told CNBC's "Squawk Box" that the greenback is headed for a "new cycle" after a six-year rally since 2011.
He added that the dollar weakness will be "one of the greatest market trends" for global investors.
Source: Bloomberg
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