U.S. Dollar weakening means higher oil prices likely
Posted: Mon Jan 16, 2023 3:53 pm
If this forecast turns out to be accurate, it should push oil prices over $85/bbl.
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Barrons on January 16, 2023
With the dollar hitting seven-month lows against major peers on Monday, another bearish forecast has landed for the greenback. Analysts at Morgan Stanley have cut their year-end estimate for the dollar and say the euro is set to be the biggest comparative gainer.
The analysts, led by James Lord, forecast the U.S. Dollar Index (ticker: DXY)—which tracks the dollar against a basket of other currencies—will end the year at 98, down from 104 previously. The DXY stood at 102.33 on Monday morning, up slightly after hitting its lowest level since June last year in early trading, as the dollar continues to fall from its highest level in more than two decades.
“Global growth is less anemic than expected, with European and Asian data increasingly likely to lead the outperformance,” the analysts wrote in a research note.
The Morgan Stanley analysts now project the euro will strengthen to $1.15 by year-end versus a previous forecast of $1.08. The euro stood at $1.0817 in trading Monday morning.
Other likely gainers are the New Zealand dollar, the Canadian dollar and the Australian dollar, as well as the Norwegian krone, the analysts say. < Bullish for our Canadian upstream companies (HMENF, IPOOF and CPG).
However, they expect the British pound and Japanese yen to struggle, with sterling hit by domestic economic difficulties in the U.K. and the yen hampered by its popularity as a funding currency, which can be sold to fund investments in higher-yielding assets.
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Barrons on January 16, 2023
With the dollar hitting seven-month lows against major peers on Monday, another bearish forecast has landed for the greenback. Analysts at Morgan Stanley have cut their year-end estimate for the dollar and say the euro is set to be the biggest comparative gainer.
The analysts, led by James Lord, forecast the U.S. Dollar Index (ticker: DXY)—which tracks the dollar against a basket of other currencies—will end the year at 98, down from 104 previously. The DXY stood at 102.33 on Monday morning, up slightly after hitting its lowest level since June last year in early trading, as the dollar continues to fall from its highest level in more than two decades.
“Global growth is less anemic than expected, with European and Asian data increasingly likely to lead the outperformance,” the analysts wrote in a research note.
The Morgan Stanley analysts now project the euro will strengthen to $1.15 by year-end versus a previous forecast of $1.08. The euro stood at $1.0817 in trading Monday morning.
Other likely gainers are the New Zealand dollar, the Canadian dollar and the Australian dollar, as well as the Norwegian krone, the analysts say. < Bullish for our Canadian upstream companies (HMENF, IPOOF and CPG).
However, they expect the British pound and Japanese yen to struggle, with sterling hit by domestic economic difficulties in the U.K. and the yen hampered by its popularity as a funding currency, which can be sold to fund investments in higher-yielding assets.