Over half of world trade is conducted in United States dollars. So what is the outlook for USD in 2022
World Trade – The outlook for the United States dollar – General
World trade and the importance of the United States dollar. It is estimated that over 50% of all international trade deals are conducted in United States dollars. The USD is also the most frequently traded currency in the world. 2021 has been a mixed year for the USD and on the 22 December it sits at – 7.51% on the Euro, -1.83% on the British pound, -2.37% on the Chinese yuan but + 10.20% on the Japanese yen.
So what is the outlook for 2022, we checked out what some of the experts are predicting.
World Trade – The outlook for the United States dollar – Trading Economics
Trading Economics are projecting a stable year ahead with some slight strengthening.
A quote for the website:
The United States Dollar is expected to trade at 96.06 by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 97.33 in 12 months time.
A link to the Trading Economics website with more detailed information:
https://tradingeconomics.com/united-states/currency
World Trade
World Trade – The outlook for the United States dollar – MarketWatch
MarketWatch believes that inflation will be the key to how the USD performs in 2022 following a stronger than expected 2021 for the dollar.
A quote from MarketWatch on USD prospects:
The Federal Reserve has got some work to do in the year ahead, but it’s the European Central Bank that may call the tune in the coming year for a currency market that’s seen the U.S. dollar enjoy a consensus-crushing 2021 rally, according to some currency watchers.
“Eurozone inflation is now becoming a key EURUSD driver, in our view,” wrote analysts Athanasios Vamvakidis and Abhay Gupta at BofA Securities, in a Friday note, referring to the euro/U.S. dollar EURUSD, -0.15% currency pair.
The ICE U.S. Dollar Index DXY, 0.10%, a measure of the currency against a basket of six major rivals, was up 7.1% in the year to date through Friday, on track for its biggest annual gain since 2015, according to FactSet data. At the end of last year, analysts had widely expected the dollar to fall in 2021 as a global economic recovery from the COVID-19 pandemic caught up with the U.S.
A link to the MarketWatch website for more detailed information on their view:
World Trade – The outlook for the United States dollar – Reuters
Reuters examined the opinions of several international banks and there was a broad consensus that the United States dollar will be stable overall with either modest gains or modest losses forecast.
Barclays bank gave the following statement when asked the question:
“We expect modest U.S. dollar depreciation over the coming year, reflecting our views of a positive backdrop for risk and commodities alongside moderate U.S. dollar overvaluation. Upside risks are largely from risk-off moves rather than U.S. outperformance and limited relative to downside risks stemming from aggressive market pricing for tighter Fed policy.”
The view from Morgan Stanley:
U.S. 10-year yields: “Continued strong growth in 2022, alongside receding but above-target inflation, keeps the Fed patient, yet gradually moving toward rate hikes, and keeps Treasury yields moving higher.”
Dollar vs euro and yen: “We see an up-and-down profile for the U.S. dollar. A Fed emphasizing that maximum employment is ways away and that subsequent hikes post-lift-off are likely to be gradual despite improving data is likely to increasingly contrast with other central banks who, having been quite dovish so far, are beginning to discuss normalization plans of their own. Policy divergence increasingly becomes policy convergence, and U.S. dollar turns lower in response.”
To read more more top line quotes from international banking corporations you can visit the Reuters article here:
World Trade – The outlook for the United States dollar – Business development opportunities
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World Trade United States Dollars
