US dollar's near-term outlook bright, but to fade in a year – Reuters poll

“Near-term bets in favor of the dollar should be increased,” per the June 28-July 1 poll of over 70 foreign exchange analysts by Reuters. Even so, the survey mentioned that the US dollar would step back versus the most major currencies in the upcoming 12 months.

The piece also quotes Morgan Stanley’s Head of G10 FX strategy North America David Adams as saying, “We are in a dollar positive regime for the next few months, which will generate some dollar strength in the near term. But over a longer time horizon, we expect the dollar to remain in a fairly broad-based range.”

Additional findings…

When asked how long the dollar's strength would last, 37 of 63 analysts said less than three months, including eleven who predicted it was already over. The remaining 26 said more than three months.

That underscores the uncertainty from the pull and push in expectations between the Fed's taper plan announcement - which separate Reuters polls forecast to come by September - and the outlook the U.S. central bank won't start scaling back its stimulus until next year.

The long-held view for a weaker dollar in the year-ahead was once again the broad consensus in the latest poll, with the EUR predicted to gain 2.6% to $1.22 in a year from a 4-1/2-month low of about $1.18 on Thursday.

While that 12-month ahead consensus is lower than predicted last month, it only reflects the single currency's significant fall in June, driven by the Fed's hawkish tone on robust economic recovery expectations, supporting the dollar.

But that has already been priced in by financial markets.

Fx implications

The survey portrays the short-term bullish outlook over the US dollar ahead of the key Nonfarm Payrolls (NFP) data. Hence, odds of the greenback’s further upside on stronger jobs report can’t be ruled out.

Read: US June Nonfarm Payrolls Preview: Analyzing major pairs' reaction to NFP surprises