Tags: Hafeez | dollar | euro | peaked

Deutsche Bank’s Hafeez: Most Currencies Have ‘Peaked Against the Dollar’

By    |   Friday, 01 March 2013 09:43 AM

Technical and fundamental factors are bullish for the dollar, says Bilal Hafeez, currency strategist at Deutsche Bank.

While some commentators say the Federal Reserve’s massive easing program has set off a currency war, the Dollar Index, which measures the currency’s value against six major currencies, has gained 4 percent over the past year.

And Hafeez expects this to continue.

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He forecasts that the euro will hit $1.10 by the end of 2015, and the dollar will climb to 115 yen. The euro was at $1.299 early Friday, the first time it has fallen below $1.30 in two months, while the dollar was at 92.83 yen.

"Almost all currencies appear to have peaked against the dollar, and the more recent rise [by the dollar against the yen] suggests the broad dollar is embarking on a multi-year up-trend," Hafeez writes in a commentary obtained by CNBC.

Historically, the dollar tends to move in six- to 10-year cycles, and the currency’s last downtrend began in 2002 and probably ended in 2011, Hafeez maintains.

On the fundamental side, U.S. economic growth has been stronger than Europe’s for more than a year, he notes. In addition, "other central banks are catching up to Fed easing [and are] having a distinctly more negative impact on their currencies over the dollar."

Others are bearish on the euro too.

“You have a lot of uncertainty in Europe right now, concerns regarding political gridlock in Italy and also concerns about growth in the eurozone,” Sireen Harajli, a currency strategist at Credit Agricole, tells Bloomberg.

“Those definitely have been limiting any gains in euro, which is contrary to what we saw earlier this year.”

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Technical and fundamental factors are bullish for the dollar, says Bilal Hafeez, currency strategist at Deutsche Bank.
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Friday, 01 March 2013 09:43 AM
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