Original title: British media: a number of investment banks predict that the dollar will fall in 2020
British media reported on December 21 that the work of investment banks to predict the direction of the economy in 2020 is almost over, and many investment banks agree on such a key point: the dollar will fall to a certain extent.
According to a report on the Financial Times website on December 18, Deutsche Bank,Goldman Sachs GroupAndBank of New York MellonIt is believed that after a decade of intermittent gains, the dollar will fall next year as concerns about global economic growth ease. At the same time, demand for riskier assets will rise as the Fed maintains or even cuts interest rates. The United States engaged in asset managementBlackrockThe company also expects the dollar to fall moderately in the first half of next year. Economic analysts at Citigroup also believe that the Fed's practice of keeping existing interest rates unchanged or even cutting them will be a catalyst for a weaker dollar next year, as lower interest rates reduce returns on dollar holdings.
According to the report, the fate of the dollar in 2020 depends on global economic growth. When investors are generally optimistic, the dollar tends to fall because investors think it is safe to buy riskier assets such as emerging markets.
In turn, fears of a slowdown in global economic growth this year have led many people to avoid risks by holding dollars:JPMorgan Chase & CoInstead of falling as sharply as many expected, the dollar index rose slowly by 1.25%.
But analysts think things will be different next year. Goldman Sachs Group expects the dollar to weaken and predicts that the euro will adjust to $1.15 by the end of next year from the current $1.10 to the dollar. Analysts at the investment bank also say the dollar will fall even more if the euro zone's economic recovery accelerates and the Fed cuts interest rates further.
"We think [the weak dollar] will occur in 2020," said Vasilios Geogionakis, head of monetary strategy at Lombard Odier Bank in Switzerland. "
Deutsche Bank analysts agree with this, because they expect global economic growth to accelerate as they enter next year, the report said. Analysts at the bank expect the euro to reach $1.20 against the dollar by the end of 2020.
The report also said that the global economy is likely to end with a growth rate of 2.5% in 2019, which is largely due to the strong performance of the US economy. But Paul Medgyessy, a senior analyst at JPMorgan Chase & Co, said that with U. S. economic growth nearly stagnant, it is difficult to predict which country will replace the United States as the driver of global economic growth.
But with interest rates in the US still much higher than in other major economies, investors have a strong incentive to hold dollars, especially for foreign investors.
In emerging markets, investors and analysts have high hopes for the Brazilian real, one of the currencies that have fallen to historic lows this year. Due to fiscal reforms, accelerated economic growth and improved global risk sentiment, coupled with relatively high interest rates, "the real is likely to be one of the most eye-catching currencies in 2020", according to strategic analysts at Commerzbank. ABN AMRO says the real could rise 10 per cent against the dollar by the end of 2020.