The US dollar is retreating from recent high levels. Most banks are expecting the US dollar to end the year strong relative to other currencies.
Most bank forecasts show the USD will likely weaken in 2020, however, the extent and speed in forecasts differ widely. This is because there are a lot of influences impacting the US dollar. There are 4 most likely reasons the US dollar gets stronger in 2020 at current forecast levels the following:
The US economy picks up, US political risks ease, and the Federal Reserve increases interest rates, supporting the USD
Economic growth in non-US countries slows down and inflation only slowly and gradually picks up.
It is increasing the chance of interest rate cuts outside of the US.
China’s economic growth is slowing more than expected, reducing China trade and lowering demand for US imports
How does a weaker USD affect?
The US economy is the biggest economy in the world. This is why events in the US significantly influences all other currencies.
Commonly, the US dollar going up in 2020, your home currency is getting weaker. When the USD falls, your home currency is getting stronger.
The USD got stronger and it is meaning the Australian Dollar fell significantly throughout the year.
If you want to see why the Australian dollar fell or what will happen to your home currency next year, check out guides for US dollar forecast 2020.
The Key Influences On The US Dollar
US Economy
The US economy is getting stronger the US dollar improves. US economy is growing and it is meaning consumer spending and employment rates. House prices are all improving.
Politics
Currently, US politics has a big influence on the US dollar. Many believe will be unable to deliver on his pre-election tax promises. Investors are selling the US dollar because there is a greater chance of it getting weaker.
Imports and Exports
The US is the world’s largest importer and this is the world’s second-largest exporter. When imports are greater than exports the US dollar rises because it signals a more prosperous economy.
Disagreement, the US and China have been engaged in a trade war with no solution in sight. This is expected to make the US dollar and it is weaker relative to other currencies.
