The dollar remains the best bet in currency markets this year as the Federal Reserve splits from global peers and moves closer to raising interest rates, according to BNP Paribas SA.
“It is still a dollar-bull story, in spite of the fact that the economic data in the U.S. has softened,” Robert McAdie, head of research and strategy at BNP Paribas SA, said in New York Wednesday. “You have a global environment in which other central banks are trying to keep their currencies competitive, and they’re going to cut.”
BNP was the second most-accurate forecaster of the euro versus the dollar in the first quarter, according to Bloomberg Rankings, when the greenback rose against all but two major peers. Speculation the Fed will increase borrowing costs boosted the currency for a record nine consecutive months.
The Fed stance compares with central banks in China and Japan, which will probably consider further easing to stimulate economic growth, he said. About 30 countries have implemented stimulus programs this year, according to data compiled by Bloomberg.
“I see further devaluation pressure,” McAdie said. “There’s going to be more and more pressure on currencies relative to the dollar.”