Chart of the day: Greenback's challenge
The US dollar is ending the year on a high note. This month's ASR-Extel year-ahead survey reveals that a net 73 per cent of respondents believe the trade-weighted US dollar will end next year at higher levels. However, such optimism suggests that it might be vulnerable in the medium term should expectations over interest rates in the United States prove wide of the mark. The next target for the trade-weighted US dollar is 100, which is around a 50 per cent retracement level. It may be a roller-coaster ride in sentiment to get there as the first quarter unfolds, with wider implications for commodity prices and the emerging markets.
David McBain is a technical analyst at Absolute Strategy Research