SMBC says that the dollar isn’t the only currency investors have to buy

SMBC says that the dollar isn’t the only currency investors have to buy

Satoshi Okagawa, senior analyst at Sumitomo Mitsui Banking Corp. in Singapore argues that the greenback may fall as other central banks tighten policy

Okagawa says that the dollar is set for further declines as central banks globally tighten policy and that will erode the dollar’s rate advantage over other currencies.

He mentions that in Asia we’ve already seen South Korea and Malaysia raise rates, while among the major economies the BOE and ECB are set to do the same too – noting that “the dollar isn’t the only currency investors have to buy”.

Well, that’s an argument we’ve all surely heard before. But as we all know, things in the FX market don’t always work in such a straightforward manner though. If it did, the US dollar would’ve been 2017’s best performer among the major bloc because of the rate hikes by the Fed.

The dollar index ended last quarter 2.29% lower, and it marks the fifth straight quarter of declines for the greenback. Coincidental or not, the index has fallen in every quarter since Trump took office in January 2017. And the five straight quarterly declines is the worst run in the dollar since 2007-08.

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