Analysts are expecting more dollar strength over the coming year
(Kitco News) -
A recent poll of more than 80 FX strategists has concluded that the U.S. dollar strength may be here to say. Around 85% of the analysts said U.S. Treasury yields and rate expectations would give the dollar the most direction over the next 12 months.
In addition to this, the Fed's tapering plans and the strength of U.S. GDP were other reasons cited in the forecasts.
Tai Hui, chief Asia market strategist at JP Morgan Asset Management said “The market in the near term is going to focus on the fact that we expect U.S. Treasury yields to keep rising on the back of the Fed’s tapering of QE and also the ongoing recovery in the U.S. economy,”
Elsewhere in the world of FX, China’s FX reserves fell almost 1% in September from the previous month. This means they are at their lowest level since April as the dollar gained ground against a basket of other major currencies. The country’s foreign exchange reserves stood at $3.201 trillion at the end of September, data from the central bank’s State Administration of Foreign Exchange showed.
With precious metals, China held 62.64 million fine troy ounces of gold at the end of September, unchanged from the previous month. However, the value of its gold reserves slipped to $109.18 billion from $113.69 billion at the end of August as gold prices eased.
Looking at the dollar index chart below on the weekly timeframe, there is a key level (95.00) coming up marked in green. In addition to this, the zone is close to the 38.2% Fibonacci retracement area. There was a large drop close to the beginning of March where the price came and used the price zone as a good area of support and previously at the end of October 2017 the area was a very strong resistance. It is not clear if the same thing will happen this time round but it must be taken note of.