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USD poised to extend its rally – Danske Bank

FXStreet (Edinburgh) - Lars Christensen, Chief Analyst at Danske Bank, sees potential for further upside in the greenback.

Key Quotes

“In general, we still expect the USD to continue to strengthen”.

“First of all, we still believe that the market is underestimating the Fed and that a re-pricing of the first Fed hike will support the USD going forward”.

“Importantly, however, we believe that USD strengthening is less dependent on Fed pricing than previously since USD has increased its status as an asset currency”.

“The USD simply delivers a higher expected return no matter whether you invest in bonds, equities or real assets”.

“In stark contrast to the USD, we expect both the EUR and the JPY to be under pressure in the coming months as the impact from negative rates in Europe should weigh on the EUR, while speculations of new pension reforms and consequently a substantial portfolio outflow out of Japan weighs on the JPY”.

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