Forex Blog: Currency Trading News & Analysis.

November 7th 2005

USD run could continue into 2006

As the USD continues to reach fresh highs against major currencies, forex traders are beginning to wonder if and when it will all end. The consensus, to the chagrin of Dollar bears, is that the USD will continue to appreciate, possibly into 2006. Traders cite a few factors. First, the Homeland Investment Act has already spurred the repatriation of $200 billion in foreign profits, a figure which is expected to double before year end. This massive inflow of capital that is currently being held overseas represents an enormous potential boon for the USD. Next, interest rate differentials between the US and other developing nations are expected to widen further before year-end, as part of the Fed’s effort to rein in inflation. Juxtapose this with decreasing prospects for an ECB rate hike, and a picture of a smooth-sailing USD begins to emerge. The Financial Times reports:

Expectations of ever-widening yields between the US and the eurozone played their part, particularly with the latter beset by weak retail sales data that may, at the margin, lessen the scope for eurozone rate hikes.

Read More: Dollar’s strong run continues

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Posted by Adam Kritzer | in Investing & Trading, US Dollar | No Comments »

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© 2004 - 2024 Forex Currency charts © their sources. While we aim to analyze and try to forceast the forex markets, none of what we publish should be taken as personalized investment advice. Forex exchange rates depend on many factors like monetary policy, currency inflation, and geo-political risks that may not be forseen. Forex trading & investing involves a significant risk of loss.