In the world, there is a significant change in relation to the dollar. Expectations of economic growth forced investors to turn to the yen, the euro and emerging market currencies, leaving the dollar bankrupt, writes The Wall Street Journal.
According to recent trends in the global economy, the dollar is losing its appeal as more realistic alternatives are presented to investors, says the Wall Street Journal.
Earlier this week, the dollar against the major currencies was trading at the lowest levels in three years, while the euro was at its highest level, the yuan also strengthened against to the dollar.
However, against the backdrop of the ECB’s tightening of monetary policy, optimistic economic forecasts are predicted in the euro zone. The same trend is also observed in Japan.
According to TD Securities strategist Mark McCormick, Europe and Japan are attracting more and more investors.
In addition, according to some analysts, predictions about the future of the dollar are not reassuring. This is because Donald Trump’s tax reform is likely to increase the US budget deficit, which would also put pressure on the dollar in 2018. In this context, the US dollar could lose a little more than his value.
A number of analysts note that the weakening dollar will have positive consequences, first of all, for US exporters. In addition, such a dynamic will justify a stronger rate hike by the US Federal Reserve (Fed).
In any case, according to the WSJ, investors will rush after profitability in Japan and Europe, where the normalization cycle of central bank monetary policy is just beginning.
