The Dollar's unprecedented run against the euro over the past 18 months is set to run out of steam in 2016, according to two of Europe's biggest money managers.. Following a 26% advance in the span, Amundi SA and Axa Investment Managers say the dollar's strength will constrain the Federal Reserve's ability to boost borrowing costs aggressively next year, after it raised rates this week for the first time in almost a decade.
Strategists surveyed by Bloomberg forecast gains in the US currency will slow to 3.4% against the euro in 2016. The year-end median forecast of $1.05 shows little conviction that the dollar will be able to strengthen past $1.0458, the 12-year high reached in March.
The Dollar rose 1.1% last week to $1.0868 against the euro. The greenback has gained 11% versus the common currency this year. The tepid outlook for the dollar is shared by David Page, senior economist at Paris-based Axa, which oversees $747 billion.
Strategists surveyed by Bloomberg forecast gains in the US currency will slow to 3.4% against the euro in 2016. The year-end median forecast of $1.05 shows little conviction that the dollar will be able to strengthen past $1.0458, the 12-year high reached in March.
The Dollar rose 1.1% last week to $1.0868 against the euro. The greenback has gained 11% versus the common currency this year. The tepid outlook for the dollar is shared by David Page, senior economist at Paris-based Axa, which oversees $747 billion.
The Federal Open Market Committee raised its target for the federal funds rate to between 0.25 and 0.5% from near zero on December 16, where it had been since 2008. Hedge funds and other large speculators reduced net futures positions that profit from gains in the dollar versus the euro to 159,961 contracts on December 15, from 172,331 contracts a week ago, according to Commodity Futures Trading Commission data.
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