USD to weaken in 2019 even as expectations for central banks tightening pushed back - CIBC

Analysts at CIBC, expect the US dollar to weaken in 2019, despite the fact that expectation for monetary tightening in other countries have been pushed back. 

Key Quotes: 

“The Fed appears to be signaling a slower pace to rate hikes going forward, and markets are now pricing in only one full hike in 2019 after the expected move next week. That’s in line with our revised forecast and something that we expected would weigh on the US$. The latter hasn’t happened, however, largely due to the fact that expectations for monetary tightening have also been pushed back in other countries/regions.”

“Looking at how far two-year bond yields have fallen from their recent peaks, the US is really in the middle of the pack, with Canada and the UK seeing a greater pull back. We still expect the US$ to weaken in 2019 as prospects for other countries brighten, but the bigger moves could now come in 2020 when a Fed cut or two could be in the cards.”