The dollar, which has outperformed 13 of its 16 most-traded counterparts this year, is poised to rise further as U.S growth prospects outstrip much of the developed world, said Alan Ruskin, global head of Group of 10 foreign- exchange strategy at Deutsche Bank AG in New York.
“The dollar looks very well placed,” Ruskin said on Bloomberg Radio’s “Surveillance” with Tom Keene. “At some point in time, the differences in growth between the U.S, Europe and Japan will click in.”
The U.S. economy is poised to grow 2 percent this year, compared with 1.3 percent in Japan, 1.1 percent in the G-10 nations and a contraction of 0.4 percent in the Euro area, according to economists surveyed by Bloomberg.
The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, gained 0.7 percent to 82.053, after dropping yesterday to the lowest since Feb. 25.
The European Central Bank cut the main refinancing rate today to a record low 0.5 percent from 0.75 percent and reduced the marginal lending rate to 1 percent from 1.5 percent. The euro turned lower as ECB President Mario Draghi, speaking in Bratislava, signaled that officials may take the unprecedented step of charging banks to park excess cash overnight with the ECB.
This comes after the Bank of Japan unleashed measures aimed at delivering a 2 percent inflation rate within two years. The Federal Reserve, yesterday, reiterated its commitment to asset purchases to spur economic growth, saying it will maintain its bond-buying, known as quantitative easing, or QE, at a pace of $85 billion a month and is prepared to raise or lower the level of purchases as economic conditions evolve.
“This year, the Fed will be the only central bank that has any chance of withdrawing or reducing QE, while all other central banks will be lathering it on,” Ruskin said. “The U.S side is much less of a problem.”
To contact the editor responsible for this story: Dave Liedtka at firstname.lastname@example.org