The dollar may strengthen against all its major peers except the yen amid a possible Greek exit from the euro and economic slowdowns in China and the U.S., according to JPMorgan Chase & Co.
“Regardless of country-specific strengths outside Europe, no currency but the yen could appreciate versus the dollar during the deleveraging and volatility spike,” Kevin Hebner, a foreign-exchange strategist for JPMorgan in London, wrote to clients today. “For the second time in six months, Greece’s Economic and Monetary Union exit seems imminent.”
The New York-based bank reduced its euro forecast to $1.22 for the second quarter from a $1.34 estimate as of May 11. The 17-nation currency will trade at $1.24 by year-end, compared with a previous forecast of $1.36. It traded at $1.27 today in New York.
Greek elections are scheduled for June 17 after an inconclusive vote in May propelled an anti-bailout party to second place.
Growth-linked currencies may weaken against the dollar as an economic slowdown in China may trim commodity prices. Canada’s dollar will weaken to C$1.04 by mid-year compared with 98 cents per U.S. dollar, the report said. Australia’s dollar may fall to 96 U.S. cents versus $1.08 and New Zealand’s currency will trade at 73 U.S. cents, down from 82 U.S. cents.
The dollar may weaken to 78 yen at the end of the second quarter. It traded at 79.98 today.
Hebner couldn’t be reached for additional comment.