By James Matthews
It has proved a volatile year for the Greenback throughout 2010 and with so much uncertainty in the market I wouldn’t expect this to change in 2011. The Dollar opened the year at 0.62 against the Pound and just under 0.70 against the Euro and has moved 12.7% and 22% against these currency respectively.
Recently the Dollar has strengthened through some risk aversion caused by the Irish bailout. This strength is likely to continue into the new year and I would expect to see some Dollar strength against the Euro throughout January as doubts regarding Spain and more immediately Portugal resurface.
I could also foresee some strength for the Greenback against Sterling as the UK introduce a rise in VAT which should dent consumer confidence. This is likely to compound Sterling woes when retail sales are released dissapointingly next quarter, following inclement weather in the UK.
This thought is echoed by top rated Forecaster Standard Chartered Bank, who forecast that the USD / EUR could go as high as 0.833 by June next year. It is worrying for anyone with their funds in Euro’s, especially considering the American economy is far from the strongest moving into 2011.
Against most other major currencies though I would expect the USD to weaken including, perhaps controversially the Pound by the end of 2011. In my opinion although the UK economy is not overly strong, the budget cuts are bound to kick in and begin to get the economic ducks of the UK, so to speak, in line. I would predict that 2011 will be a tough year for the US Dollar against all major currencies with exception to the Euro, and some short term strength against Sterling in the front end of next year.
If you have your funds in US Dollars and are looking at an imminent requirement it may be worth looking forward as it may be a very difficult year ahead for the American economy. Fill out an enquiry form and a member of the findcurrency team will be in touch.