The dollar's direction is in limbo as financial markets await a clearer path from the U.S. Federal Reserve, according to a Reuters poll of FX strategists who were split on where they expected the currency to trade over the next three months.
On the back foot even before Fed Chair Jerome Powell's comments last Friday at Jackson Hole, the greenback has lost almost 1.4% since it hit a nine-month high about two weeks ago. But it is still up around 3% for the year.While analysts in the Aug. 30-Sept. 2 poll of nearly 60 FX strategists expected the greenback to give up most of those gains over the coming year, they were increasingly uncertain about both the short- and medium-term outlook.
Eventual Fed tapering of its $120 billion of monthly bond purchases, which an over 75% majority of 51 analysts expected the central bank to announce in the final quarter of this year, should help U.S. Treasury yields to move higher. Data from the U.S. Commodity Futures Trading Commission released on Aug. 27 showed speculators had once again increased their net long U.S. dollar positions.
Asked how confident they were in that view, 62% of strategists, 36 of 58, said they were not confident or not at all confident. Twenty-two chose confident.