Oil falls on stronger US dollar, China worries; heading for weekly gain

TOKYO/SINGAPORE, Sept 8 – Oil extended losses on Friday, further receding from this week’s 10-month highs, as fears about the health of China’s slowing economy and a stronger U.S. dollar wiped out the gains triggered by supply cuts from major producers Saudi Arabia and Russia.

Brent crude futures dropped 41 cents, or 0.5%, to USD 89.51 a barrel by 0619 GMT, while US West Texas Intermediate crude (WTI) futures declined 50 cents, or 0.6%, to USD 86.36.

Both benchmarks reached 10-month highs earlier this week on concerns about potential shortages during the peak winter demand season after Saudi Arabia and Russia extended their voluntary supply cuts to the end of the year.

Despite these bullish signals, China’s bumpy recovery, and the strong U.S. dollar, are weighing on prices, said Priyanka Sachdeva, senior market analyst from Phillip Nova.

Investors expect U.S. interest rates to linger at 20-year highs, and that has unleashed the dollar, making it more expensive to buy crude in other currencies.

The U.S. dollar index was just off a six-month peak on Friday.

“Investors took profits after the recent rally which was driven by concerns over tighter supply following extended production cuts in Saudi Arabia and Russia,” said Tatsufumi Okoshi, senior economist at Nomura Securities.

“The market has factored in the news of lower supply and it would need clear signs of stronger global demand, especially in China, to move higher,” he said, noting investors’ consensus is that Beijing’s stimulus has so far failed to boost to its economy.

China’s overall exports and imports fell in August, data showed on Thursday, as the twin pressures of sagging overseas demand and weak consumer spending squeezed businesses in the world’s second-largest economy.

But China’s crude imports surged 30.9% last month as refiners built inventories and increased processing to benefit from higher profits from exporting fuel.

A bigger-than-expected draw in US crude oil inventories lent muted support to oil prices.

U.S. crude oil stockpiles fell for the fourth consecutive week, with inventories down more than 6% in the last month, as oil refiners run at high rates to keep up with global energy demand, Energy Information Administration data showed on Thursday.

Crude inventories fell by 6.3 million barrels, triple the 2.1 million-barrel drop that analysts expected.

Despite its pledge to maintain supply cuts, Russia is expected to boost its oil exports in September as Russian refineries start seasonal maintenance, Reuters calculations based on sources’ data show, which is also curbing price gains.

For the week, Brent and WTI were still on track for a nearly 1% gain.

(Reporting by Yuka Obayashi and Muyu Xu; Editing by Miral Fahmy and Stephen Coates)

((Yuka.Obayashi@thomsonreuters.com; +813-4520-1265;))

Oil prices rise to 9-month high on worries about tight supply

NEW YORK, Sept 8 – Oil prices gained almost 1% to a nine-month high on Friday on rising US diesel futures and worries about tight oil supplies after Saudi Arabia and Russia extended supply cuts this week.

Brent futures rose 73 cents, or 0.8%, to settle at USD 90.65 a barrel, while US West Texas Intermediate (WTI) crude rose 64 cents, or 0.7%, to settle at USD 87.51.

Both crude benchmarks remained in technically overbought territory for a sixth straight day, with Brent’s settlement its highest since Nov. 16. WTI’s settlement was its highest since Sept. 6, which was its highest since November.

For the week, both benchmarks were up about 2%, following gains last week of about 5% for Brent and about 7% for WTI.

“Crude prices continue to trade on supply-side drivers. No one is doubting that OPEC+ will keep this market tight going into the winter,” Edward Moya, senior market analyst at data and analytics firm OANDA, said in a note.

The Organization of the Petroleum Exporting Countries (OPEC) and their allies like Russia are collectively known as OPEC+.

This week, OPEC member Saudi Arabia and Russia extended their voluntary supply cuts of a combined 1.3 million barrels per day to the end of the year.

Saudi Arabia will probably find it difficult to end its cuts at the end of the year without triggering a price slide, Commerzbank analysts said in a note.

In the US, energy firms this week added one oil rig, the first weekly increase since June, according to energy services firm Baker Hughes (BKR).

Rising US diesel prices also supported crude prices with heating oil futures up about 3%.

Energy traders noted seasonal refinery maintenance in Russia in September will likely reduce diesel exports but could lead to an increase in oil exports.

Separately, Venezuelan President Nicolas Maduro arrived in China on Friday for his first visit in five years. China is the world’s largest oil importer and Venezuela, an OPEC member, has the world’s largest proven crude reserves.

CHINA DEMAND CONCERNS

The oil market is still concerned about the demand outlook in China, which has had a sluggish post-pandemic recovery and stimulus pledges have fallen short of expectations.

China has been deluged by the heaviest rain since records began 140 years ago in Hong Kong, killing two people and injuring more than 140, state media reported.

Data on Thursday showed overall Chinese exports and imports fell in August, as sagging overseas demand and weak consumer spending squeezed businesses.

In Germany, the lower house of parliament passed a bill that could reduce future fossil fuel demand by phasing out oil and natural gas heating systems.

Oil traders are also watching whether central banks in the US and Europe will keep fighting inflation with interest rate hikes.

“Riyadh (Saudi Arabia) is acutely aware of the tightrope it walks between tightening the market and upsetting any up-and-until-now progress achieved by central banks in taming price-rise driven inflation,” said John Evans of oil broker PVM.

Interest rate hikes can slow economic growth and reduce oil demand.

(Additional reporting by Natalie Grover and Robert Harvey in London, Yuka Obayashi in Tokyo, and Muyu Xu in Singapore; editing by Ros Russell, Jason Neely, Susan Fenton, David Gregorio, and Leslie Adler)

Stocks fall with Apple, dollar rises after US data

NEW YORK, Sept 7 – Global stock indexes were mostly lower on Thursday, with the S&P 500 and Nasdaq falling with shares of Apple, and the US dollar advanced after weaker-than-expected US jobless claims data.

Initial claims for state unemployment benefits fell unexpectedly to 216,000 in the week ended Sept. 2 from a revised 229,000 the week before. The latest week’s numbers were the lowest since February.

A separate report showed US worker productivity in the second quarter was not as strong as initially announced.

Recent data has underscored the view that the US economy remains resilient and that US interest rates may need to stay higher for longer.

China’s onshore yuan slid to a 16-year low versus the dollar, weighed down by a property slump, weak consumer spending and shrinking credit growth in the world’s second-largest economy.

China trade data released on Thursday, while not as dire as economists predicted, still showed a nearly 9% slide in exports and a more than 7% drop for imports.

In Japan, traders remained on intervention watch as the Japanese yen struggled to make sustained headway against a resilient dollar.

The greenback hit a fresh top of 147.875 yen earlier, its highest since November, and was last down 0.4% at 147.20.

Against a basket of currencies including the euro and sterling, the dollar rose 0.1% to 105.05, after earlier touching a six-month peak.

“The fundamental story in the US is still a bit stronger than the rest of the world. That continues to be a huge catalyst for dollar strength,” said Brad Bechtel, global head of foreign exchange at Jefferies in New York.

Shares of Apple (AAPL) were down 2.9% after sources familiar with the matter said China has in recent weeks widened existing curbs on the use of iPhones by state employees.

The Dow Jones Industrial Average rose 57.54 points, or 0.17%, to 34,500.73, the S&P 500 lost 14.34 points, or 0.32%, to 4,451.14 and the Nasdaq Composite dropped 123.64 points, or 0.89%, to 13,748.83.

European stocks ended down for a seventh straight session, while the MSCI global index was down for a third day in a row.

The pan-European STOXX 600 index ended down 0.1% and MSCI’s gauge of stocks across the globe shed 0.35%.

US Treasury yields eased following the US economic data.

The yield on the benchmark US 10-year Treasury note fell to 4.25%.

Investors also digested comments late in the day from Federal Reserve Bank of New York President John Williams, who said that it’s an “open question” whether monetary policy is restrictive enough to bring the economy back into balance.

In the energy market, Brent crude oil fell below USD 90 a barrel in volatile trade after a near two-week rally, amid signals of weaker demand.

Brent crude futures settled 68 cents, or 0.8%, lower at USD 89.92 a barrel, while US crude futures finished down 67 cents, or 0.8%, at USD 86.67.

(Additional reporting by Gertrude Chavez-Dreyfuss in New York, Marc Jones in London, and Kevin Buckland in Tokyo; Editing by Susan Fenton, Nick Zieminski, and Diane Craft)

US yields dip after data as investors focus on Fed officials’ comments

NEW YORK, Sept 7 – US Treasury yields declined on Thursday, as a move higher following labor market and productivity data proved to be short-lived, with investors awaiting comments from a host of Federal Reserve officials scheduled to speak throughout the day.

Yields initially moved up after the Labor Department said initial claims for state unemployment benefits fell 13,000 to 216,000 in the week ended Sept. 2, the lowest level since February and the fourth straight weekly decline, from a revised 229,000 in the prior week. A separate Labor Department report showed worker productivity in the second quarter was not as strong as initially estimated.

Analysts attributed the reversal to investors’ focus on seasonality in the jobless claims data and a retreat after three straight days of higher yields. There was also uncertainty about the monetary policy outlook ahead of comments by Fed officials.

While Philadelphia Fed President Patrick Harker did not comment on the monetary policy and economic outlook in a speech, investors were awaiting comments from several other US central bank officials, including Chicago Fed President Austan Goolsbee, New York Fed President John Williams and Fed Governor Michelle Bowman.

“Everyone’s keen to see whether more FOMC (Federal Open Market Committee) members share Waller’s view from earlier in the week where he turned, I would say, a fair bit less hawkish,” said Gennadiy Goldberg, interest rates strategist at TD Securities in New York, referring to Fed Governor Christopher Waller.

“I don’t want to go so far as to call him a dove, but (he was) less hawkish about further rate hikes.”

“So that’s really where the question is at the moment, it’s less so on the morning data.”

The yield on the benchmark US 10-year Treasury note was down 3 basis points to 4.26%.

The yield on the 30-year bond fell 1 basis point to 4.352%.

On Tuesday, Waller said the latest batch of economic data gave the Fed space to determine whether it needs to raise interest rates again.

Yields had risen sharply earlier this week, with the 10-year yield climbing about 20 basis points, its biggest three-day session gain in about a month. Analysts partly attributed that move to a widely anticipated influx of corporate debt following the Labor Day holiday.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a negative 69.5 basis points.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, fell 7 basis points to 4.955%

The breakeven rate on five-year US Treasury Inflation-Protected Securities (TIPS) was last at 2.286% after closing at 2.283% on Sept. 6.

The 10-year TIPS breakeven rate was last at 2.311%, indicating the market sees inflation averaging about 2.3% a year for the next decade.

(Reporting by Chuck Mikolajczak; Editing by Sharon Singleton and Paul Simao)

Gold steadies as traders brace for Fed speeches

Sept 7 – Gold held steady after briefly trimming gains on Thursday as data showed tightness in the US job market, with focus now shifting to a host of Federal Reserve speakers for cues on interest rate hikes.

Spot gold was up 0.1% at USD 1,918.68 per ounce by 1:47 p.m. EDT (1747 GMT), after hitting a one-week low on Wednesday. US gold futures settled 0.1% lower at USD 1,942.50 per ounce.

Gold is choppy due to a lack of fresh fundamental news and it is just trading on technicals favoring the bearish camp at the moment, but some short covering on the dips based on some perceived value buying is keeping it afloat, said Jim Wyckoff, senior market analyst at Kitco.

Gold held firm despite an uptick in the dollar. Meanwhile, a drop in benchmark 10-year Treasury yields below a two-week peak scaled in the previous session offered some support to bullion.

According to the CME FedWatch tool, traders see a 93% chance of the Fed leaving rates unchanged at its Sept. 19-20 meeting.

Higher US interest rates raise the opportunity cost of holding gold, which does not earn any interest.

“Fed is dealing with a double-edged sword because if it continues to raise interest rates at a time of rising crude oil prices, it risks pushing the US economy into recession. However, it also has to worry about rising inflation due to rising oil prices,” Wyckoff said.

Investors will be watching closely the Fed presidents lined up to speak throughout the day.

US economic growth was “modest” in recent weeks amid cooling job growth and inflation in most parts of the country, the Fed’s “Beige Book” published on Wednesday showed.

Silver fell about 1% to USD 22.95 per ounce, platinum lost 0.3% to USD 905.75 and palladium eased 0.1% to USD 1,214.11.

(Reporting by Harshit Verma in Bengaluru; Editing by Shinjini Ganguli, Shailesh Kuber, and Diane Craft)

Asia stocks slide on U.S. rate worries, dollar ascendant

TOKYO, Sept 7 – Asian stocks sank on Thursday, extending global equity declines after new signs of sustained inflationary pressures in the United States boosted the case for elevated interest rates for longer.

The US dollar hung close to its highest point since mid-March against major peers, and touched a fresh 10-month top to the yen. Long-term Treasury yields hovered near two-week highs near 4.3%.

Brent crude stayed above USD 90 amid tightening supply, adding to inflation worries.

MSCI’s broadest index of Asia-Pacific shares slid 0.68% after declines on Wall Street and in Europe.

Hong Kong’s Hang Seng and an index of mainland Chinese blue chips eached dropped about 1%. Australia’s benchmark lost 1.24%.

Japan’s Nikkei sagged 0.64%, on course to snap an eight-session win streak.

US stock futures pointed to a 0.2% decline after a 0.7% slide for the S&P 500 overnight.

German DAX futures were down 0.36% and UK FTSE futures FFIc1 slipped 0.26%.

Wall Street stocks sold off after U.S. data showed the services sector unexpectedly picked up steam in August, suggesting stubborn inflationary forces.

Although traders are still fairly certain the Federal Reserve will forego a rate increase this month, they put the risk of one by year-end at closer to a coin toss. A rate cut is not expected until June.

“The data doesn’t flip the script, but it shows the war against inflation hasn’t been won,” said Kyle Rodda, senior financial markets analyst at Capital.com in Melbourne.

“It all goes back to the discussion of where that magical neutral rate happens to be,” he said. “While the markets are still feeling around for where that rate may be, it’s going to weigh on equities and support the US dollar.”

The dollar index – which measures the currency against six developed-market peers, including the yen and euro – ticked up 0.07% to 104.93. It jumped to the highest since March 15 on Wednesday at 105.03.

The dollar earlier reached its strongest level since Nov. 4 versus the yen at 147.875.

The currency pair tends to move in step with long-term Treasury yields, which stood at 4.29% on Thursday after pushing to their highest since Aug. 23 at 4.306% in the previous session.

The euro, meanwhile, drooped 0.1% to USD 1.0716, following its dip to a three-month trough of USD 1.0703 on Wednesday.

Elsewhere, the People’s Bank of China continued its bid to shore up the yuan by again setting strong official midpoints for the currency.

Despite those efforts, the yuan continues to hover on the weaker side of the closely watched 7.3 per dollar level in offshore trading, last changing hands at 7.3332. It sank to the lowest since early November at 7.3490 in the middle of last month, undercut by a rapidly deteriorating property sector and the risk of spillover into broader markets.

China trade data released Thursday, while not as dire as economists predicted, still showed a nearly 9% slide in exports and a more than 7% drop for imports.

The Australian dollar, which often trades as a proxy for its top trading partner, eased 0.26% to USD 0.6366, keeping it close to this week’s 10-month low.

“Another set of poor Chinese economic data is not helping,” Joseph Capurso, a strategist at Commonwealth Bank of Australia, wrote in a client note. “The absence of a large package to stimulate the Chinese economy will remain a weight on AUD for the near term at least.”

Crude paused its steady climb of the past two weeks during Asian hours on Thursday, as worries about Chinese demand offset some of the effects of expectations for a fall in U.S. inventories and extended supply cuts by Saudi Arabia and Russia. O/R

Brent crude futures fell 24 cents to USD 90.36 a barrel, after a nine-session winning streak. US West Texas Intermediate crude (WTI) futures fell 29 cents to USD 87.25 after a seven-session gain.

(Reporting by Kevin Buckland; Editing by Simon Cameron-Moore)

Dollar shines on robust US economy, yen skids to 10-month low

SINGAPORE, Sept 7 – A buoyant dollar pushed the yen to a 10-month trough on Thursday and kept the euro and sterling pinned near three-month lows, as investors placed their faith in a still-resilient US economy even amid a dour global growth outlook.

A lower-than-expected fall in China’s exports and imports numbers in August did little to lift investors’ spirits, as they remain on the lookout for further support measures from Beijing to shore up the economy and revive market confidence.

The greenback scaled a fresh top of 147.875 yen in early Asia trade, its highest since last November.

Against a basket of currencies, the dollar rose 0.05% to 104.91, holding on to some of its gains from the previous session after scaling a six-month peak as the U.S. services sector unexpectedly gained steam in August.

The euro was last 0.09% lower at USD 1.0718, after having fallen to its lowest since June on Wednesday. Sterling slipped 0.06% to USD 1.2500, having also bottomed at a three-month trough in the previous session.

Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia, said the Institute for Supply Management’s US non-manufacturing PMI reading was positive.

“Those thinking of a (US) recession in the near term might be a little bit disappointed,” he said. “However, the Beige Book … wasn’t that great, actually.”

US economic growth was “modest” in recent weeks, job growth was “subdued,” and inflation slowed in most parts of the country, the Federal Reserve report known as the “Beige Book” published on Wednesday showed.

“I think that what’s really driving the dollar is not so much that the US economy is doing great, but it’s doing better than elsewhere,” Capurso said.

Market pricing shows a more than 40% chance that the Fed will deliver another rate hike in November, according to the CME FedWatch tool, though expectations are for policymakers to keep rates on hold later this month.

Conversely, Bank of England (BoE) Governor Andrew Bailey said on Wednesday that the central bank was “much nearer” to the end of its rate-hike cycle, though borrowing costs might still have further to rise because of stubborn inflation pressures.

On the same day, European Central Bank (ECB) policymakers warned investors that the decision for a rate increase next week was still up in the air, but a rise in borrowing costs was among the options on the table.

“It was surprising to see those dovish comments from Governor Bailey … that certainly does make us comfortable that they’re only going to hike twice more,” Capurso said, referring to the BoE.

“As for the ECB, what we’re noticing is that there’s a real divergence happening between various ECB members, and that to me is suggesting that at most you get one more rate hike out of the ECB.”

Asia danger?
China’s exports in August fell 8.8% from a year earlier, while imports contracted 7.3%, data showed on Thursday, coming in slightly better than economists’ forecasts for a 9.2% and 9.0% drop, respectively.

That did little to help the Australian dollar, which was still down 0.2% at USD 0.6370, while the New Zealand dollar last bought USD 0.5871, with both languishing near their recent 10-month lows.

The two antipodean currencies are often used as liquid proxies for the Chinese yuan.

The onshore yuan slid to a fresh 10-month low of 7.3252 per dollar.

“I think we’re all fatigued over the weak China-data theme,” said Matt Simpson, senior market analyst at City Index.

“Trade data was expected to come in relatively soft, and whilst it surpassed expectations, we’re going to need to see a much stronger beat to get markets out of their rocking chairs.”

In Japan, traders continued to be on intervention watch as a fragile yen struggled to make headway against a resilient dollar, even as officials stepped up their warnings against a sell-off in the currency.

The yen last bought 147.66 per dollar.

(Reporting by Rae Wee; Editing by Jacqueline Wong and Jamie Freed)

Brent falls below USD 90/bbl, pausing rally, on weaker demand outlook

HOUSTON, Sept 7 – Global benchmark Brent crude oil fell below USD 90 a barrel on Thursday in volatile trade, halting a near two-week rally, on multiple signals warning of weaker demand in the coming months.

Brent crude futures settled 68 cents, or 0.8%, lower at USD 89.92 a barrel, after trading between USD 89.46 and USD 90.89.

US West Texas Intermediate crude (WTI) futures finished down 67 cents, or 0.8%, at USD 86.67 a barrel, after trading between USD 86.39 and USD 87.74.

Thursday’s fall came after nine straight sessions of gains in WTI and seven straight gains in Brent.

Prices had also spiked earlier in the week after Saudi Arabia and Russia, the world’s top two oil exporters, extended voluntary supply cuts to the year-end. These were on top of the April cuts agreed by several OPEC+ producers running to the end of 2024.

“Crude futures are feeling some corrective pressure from a new high in the US Dollar Index as well as more weakening economic numbers from the euro zone, where economic activity grew by 0.1% vs the 0.3% expected,” said Dennis Kissler, senior vice president of trading at BOK Financial.

The dollar gained, pushing the yen to a 10-month low and driving the euro and sterling to their weakest levels in three months, as investors placed their bets on a still-resilient US economy. A stronger dollar boosts the cost of greenback-denominated oil purchases for holders of other currencies.

“As I begin to look down the road a bit there are signals saying hold up,” said John Kilduff, partner with Again Capital.

Market participants also digested mixed data from China. Overall exports fell 8.8% in August year on year and imports contracted 7.3%. But crude imports surged 30.9%.

“The wind has been taken out of the bulls’ sail overnight by rising Chinese product exports last month, albeit crude oil imports rose,” PVM Oil analyst Tamas Varga said.

Concerns about rising oil output from Iran and Venezuela, which could balance out a portion on cuts from Saudi and Russia, kept a lid on the market as well.

US demand, however, remained strong, as crude oil stockpiles drew down by 6.3 million barrels last week, falling for a fourth consecutive week and down over 6% in the last month, government data showed.

“At present, it is really difficult for us to see any negative factors due to supply constraints,” said CMC Markets’ Shanghai-based analyst Leon Li.

“However, we need to consider possible demand risks such as in the fourth quarter, the market could slow into an off-peak season for oil consumption after summer demand ends.”

(Reporting by Erwin Seba in Houston; Additional reporting by Arathy Somasekhar in Houston; Ahmad Ghaddar in London; Trixie Yap in Singapore; Editing by Marguerita Choy, Frances Kerry, and Nick Macfie)

Gold hovers near 1-week low as dollar firms on US data

Sept 7 – Gold prices lingered near a one-week low on Thursday following five consecutive sessions of losses as the dollar sat atop mid-March highs after data showed the US services sector unexpectedly gained steam in August.

Spot gold was flat at USD 1,918.14 per ounce by 0535 GMT, and hovered close to its lowest level since Aug. 29 hit in the previous session. US gold futures edged 0.1% lower to USD 1,942.30.

Weighing on greenback-priced gold, the US dollar was perched at its highest since March 16 and the benchmark US Treasury yield rose after stronger-than-expected US services sector data on Wednesday suggested that inflationary pressures remain.

“While the Fed is done with tightening for the current cycle, what remains highly uncertain is the outlook on Fed cuts in 2024,” said OCBC Executive Director and FX Strategist Christopher Wong.

“Gold may continue to stay depressed until Fed’s dovish pivot comes into sight.”

Higher US interest rates raise the opportunity cost of holding gold, which does not earn any interest.

Boston Fed President Susan Collins on Wednesday called for the US central bank to take its next monetary policy steps carefully, while acknowledging signs of progress in cooling inflation.

US economic growth was modest amid a cooling labour market and slowing inflation pressures in July and August, a Fed report showed on Wednesday.

Policymakers expect persistently slower growth in top bullion consumer China, seeing its transition from an infrastructure- and investment-led economy to becoming consumption-driven as “difficult”.

Data earlier in the day showed top metals consumer China’s exports fell 8.8% in August year-on-year, while imports contracted 7.3%.

SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.4% on Wednesday.

Silver eased 0.4% to USd 23.09 per ounce, platinum rose 0.1% to USD 909.73 and palladium dropped 1.2% to USD 1,200.55.

(Reporting by Deep Vakil in Bengaluru; Editing by Rashmi Aich and Sherry Jacob-Phillips)

Dollar to stay bright this year before fading in 2024 – analysts

BENGALURU, Sept 7 (Reuters) – The dollar’s strength will be difficult to overcome for most major currencies by year-end, according to a Reuters poll of forex strategists who said the risks to their greenback outlook were skewed to the upside.

Backed by a strong economy and rising US Treasury yields, some of the highest among developed economies, the dollar despite bouts of weakness has stayed resilient against most major currencies.

Hitting a six-month peak as jitters over China and global growth weighed on risk appetite and expectations the US Federal Reserve will hold interest rates higher for longer, the safe-haven dollar recovered almost all of its mid-year losses and is now up over 1% for the year.

That strong performance has brought the long-held view of a weaker dollar in the short to medium term under review.

A solid 81% majority of analysts, 43 of 53, who answered an additional question said the risk to their dollar outlook was to the upside, the Sept. 1-6 Reuters poll showed.

“We think dollar strength has got further to run and will sustain over the next three months,” said Jane Foley, head of FX strategy at Rabobank.

But the dollar was expected to have weakened modestly against most major currencies in a year, according to the median view of around 70 foreign exchange strategists, with the bulk of it coming next year as the first Fed interest rate cut comes closer.

“In the next six to nine months, we are expecting the Fed to start to cut rates and it’s at that point where we think that the dollar will re-weaken again,” said Lee Hardman, senior currency analyst at MUFG.

The euro, unable to make any significant headway over a deteriorating growth outlook and up only 0.13% for the year, was forecast to trade 1.7% higher at USD 1.09 in three months, largely unchanged from an August survey.

It was forecast to have gained 2.7% to USD 1.10 and 4.6% to USD 1.12 in six and 12 months, respectively.

The Japanese yen, already down over 11% for the year against the dollar, trading at 147/dollar on Wednesday, was forecast to pare back all of the current year’s losses and change hands at 132/dollar in the next 12 months.

Sterling, already up nearly 3.5% in 2023 was forecast to gain another 3% to USD 1.29 in a year.

Elsewhere, other Asian currencies stand to face significant friction in recouping losses for the year, according to the poll. Almost all were forecast to at best stay within a range or trade modestly higher against the dollar in coming months.

In Latin America, the Brazilian real BRBY and the Mexican peso, up around 6% and 12% against the dollar, respectively, were expected to lose only slightly by end-year.

The Argentine peso, however, down 50% for the year, could be heading for another major devaluation, and lose a further 17% by end-November, the poll found.

(Reporting by Sarupya Ganguly; Polling by Sujith Pai, Devayani Sathyan, and Pranoy Krishna; Editing by Hari Kishan and Andrea Ricci)

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