The U.S. Dollar is entering its final innings as the dominant force in the global foreign exchange market for this cycle, according to forecasts from CIBC Capital Markets, and will soon cede ground to other developed world currencies. America’s greenback has swept the board to claim the mantle of best performer in the G10 space this year, thanks largely to a superior performance from the U.S. economy, which has enabled the Federal Reserve to go on raising its interest rate at a time when other central banks have spent much of the year sitting on their hands.
The same winds that propelled the U.S. Dollar to its November peaks in 2018 will soon turn against it and leave the greenback humbled once into 2019, as the Federal Reserve comes close to the end of its own monetary policy road and other central banks begin to normalise their interest rate structures. This will have seismic implications for the currency market because of the push and pull influence that changes in interest rates have on capital flows, and their allure for short-term traders. As a result, the U.S. Dollar is forecasted to cede ground to all G10 currencies other than the Canadian Dollar next year.