"Dollar seems to have passed its peak... Non-US markets expected to strengthen if dollar weakens further" -iM

Korea Economic Daily

Summary

iM Securities analyzed that the dollar has likely passed its peak and could see expanded weakness.
They indicated that non-US markets are expected to show strength due to recovery momentum in non-US economies and strengthened preference for emerging assets.
They reported that potential Russia-Ukraine war peace negotiations and oil price declines could affect the dollar's further decline.

iM Securities analyzed on the 18th that "the dollar's weakening trend could expand in the future, and it is increasingly likely that the dollar has passed its peak."

Park Sang-hyun, a researcher at the securities firm, said "The dollar's weakening trend has continued this year, and the magnitude of weakness is gradually expanding. Although it's still early in the year and Trump's tariff policy uncertainty remains, unlike last year, the dollar's atmosphere is likely to continue."

He added, "The super-dollar phenomenon, which relied on the Fed's rate hike cycle and US economic exceptionalism, may slow down," and "The recovery momentum of non-US economies, emerging asset preference strengthening after deep seek, and conversely, the easing of extreme dollar asset preference suggest recent dollar weakness and potential for additional weakness."

He also predicted, "When the dollar value peaked in September 2022, the US 10-year Treasury yield approached 5% due to the Fed's aggressive rate hike cycle," and "Given that there is sufficient room for the Fed's rate cut cycle to resume, it won't be easy for the dollar to rebound to previous peak levels."

He continued, "It's true that Trump's tariff policy doesn't yet have much impact on the foreign exchange market," and "Moreover, since the aftermath of the tariff policy could affect both non-US and US economies, the impact of tariff risk on the dollar is limited compared to the Fed's interest rate policy."

Park forecasts that non-US stock markets could continue to strengthen if the dollar weakens further.

He added, "Based on these factors, global funds are expected to continue flowing into non-dollar asset markets," and "If expectations for Russia-Ukraine war peace negotiations progress, leading to further euro appreciation, and if oil prices fall further to the $60 per barrel range, the dollar's additional decline could expand."

Roh Jung-dong, Hankyung.com reporter dong2@hankyung.com