In 2025, the dollar exchange rate may face a risk wall after a strong start - MLIv survey.
November 25, 2024 8:52AM JST
The dollar is expected to rise towards next year, and there is a caution against the risk of upward pressure after the start of the next administration.
Concerns about accelerated inflation and trade wars top the list of risks for 2025.
While the dollar exchange rate is expected to start strong in 2025, the following year will face risks such as accelerated inflation and rapid expansion of fiscal deficits. This was revealed by the latest Bloomberg "Markets Live (MLIV) Pulse" survey.
In a survey conducted with a focus on next year, opinions among the 89 respondents were divided on various risks that could have the largest negative impact on the dollar. Concerns about fiscal deficits received the most responses, accounting for 38% of the total. If President-elect Trump implements the series of promised trade tariffs after taking office in January, 32% responded that it could lead to a slowdown in US and global economic growth, becoming a downward pressure factor on the dollar.
The dollar is expected to rise towards next year, and there is a caution against the risk of upward pressure after the start of the next administration.
Concerns about accelerated inflation and trade wars top the list of risks for 2025.
While the dollar exchange rate is expected to start strong in 2025, the following year will face risks such as accelerated inflation and rapid expansion of fiscal deficits. This was revealed by the latest Bloomberg "Markets Live (MLIV) Pulse" survey.
In a survey conducted with a focus on next year, opinions among the 89 respondents were divided on various risks that could have the largest negative impact on the dollar. Concerns about fiscal deficits received the most responses, accounting for 38% of the total. If President-elect Trump implements the series of promised trade tariffs after taking office in January, 32% responded that it could lead to a slowdown in US and global economic growth, becoming a downward pressure factor on the dollar.
The Bloomberg Dollar Spot Index has updated its longest weekly consecutive rising record in the past year, hovering at a high level not seen since 2022. In the market, there is a bullish position on the dollar as background expectations that Trump's policies will lead to a higher value for the domestic currency.
However, survey respondents pointed out that while the policies of the next administration may lead to a short-term strengthening of the dollar, they could have a negative impact on the economy in the long run, ultimately undermining the attractiveness of the dollar.
During the first Trump administration, this market scenario unfolded. After Trump's victory in the 2016 presidential election, until his inauguration in January of the following year, US bond yields rose rapidly, and the dollar increased by nearly 5%. Subsequently, as the US economy lost momentum while European economic growth accelerated, the dollar plunged significantly in 2017.
During the first Trump administration, this market scenario unfolded. After Trump's victory in the 2016 presidential election, until his inauguration in January of the following year, US bond yields rose rapidly, and the dollar increased by nearly 5%. Subsequently, as the US economy lost momentum while European economic growth accelerated, the dollar plunged significantly in 2017.
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