4.52 PM Thursday, 28 March 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:57 06:11 12:27 15:53 18:37 19:51
28 March 2024

Dollar poised to rally in Q1

Published
By Staff

The US dollar could become a global safe haven next year as the world economic growth is expected to stall, according to analysts at forex.com, the retail division of GAIN Capital, a global provider of online trading services.

“In Q1 2012, worldwide economic growth is likely to stall, increasing the possibility of a global recession.  As a result, we foresee the US dollar becoming a global safe haven, gaining strength from repeated waves of risk aversion triggered by potential events such as EU sovereign ratings downgrades, weak economic data, and ongoing credit market stresses in Europe,” analysts said in a press statement on Tuesday.

“We are not anticipating an outright collapse of the euro zone, but price falls are likely to be sharper and steeper than any rises. We also can’t exclude the possibility of a catastrophic decline in the stock market along the lines of the 2008 market meltdown,” said Brian Dolan, chief currency strategist at forex.com.

“Investors seeking relative stability will look to the US dollar. Therefore, we expect the US dollar to gather momentum in the first quarter,” he said in first-quarter outlook report.

Other projections include:

·      A US dollar rally being generally bearish for commodity prices overall.

·      Massive amounts of EU government and bank debt needing refinancing in 2012 with investors being increasingly skittish, conceivably leading to defaults.

·      Swiss National Bank and Bank of Japan continuing to intervene to prevent CHF and JPY from strengthening further providing possible trading opportunities.

·      Bank of England pursuing a third round of asset purchases after the current program is completed in March, maintaining downward pressure on sterling.

·      In addition to financial risks in 2012, investors need to judge significant political risks that could make for a volatile first quarter.