USD Index to ease, hitting 98 by end of Q4 2024 – ANZ

The US Dollar Index (DXY) has suffered a sharp sell-off from a high of 107 to a low of 102.5 in October and November. Economists at ANZ Bank analyze Greenback’s outlook.

Fading fiscal support in the US combined with the impact of interest rate hikes will impact growth in the US

We think the DXY will extend its decline and forecast it will be at 98 in Q4 2024; but it will be a choppy, non-linear, gradual move given late cycle dynamics. 

Fading fiscal support in the US combined with the impact of interest rate hikes will impact growth in the US. Further widening of the deficit will likely drive investors to demand a higher risk premium for US assets once again. Credit rating agencies have placed the US sovereign credit rating on negative outlook after partisan disagreements over the national budget. These developments are long-term issues and will not be resolved in the short term. This adds to our bearish view of the USD.