In 2019, the dollar will be cheaper, but you can earn on it - UBS

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Analysts of the Swiss financial holding UBS Group expect the weakening of the US dollar over the next two years.

Experts cited a recovery in economic growth and a tightening of monetary policy outside the country as reasons that could lead to a steady decline in the value of the American currency.

"The best trading idea in the Forex market in 2019, we believe the opening of long positions in the Australian dollar (AUD) and the Norwegian krone (NOK) against short positions in the Canadian (CAD) and American (USD) dollars," said the company.

"It is assumed that progress in trade negotiations, increased fiscal stimulation in the Middle Kingdom and a depreciation of the US dollar will support the AUD, even if the Reserve Bank of Australia will keep the interest rate unchanged until 2020. Meanwhile, CAD will lag behind if the Bank of Canada completes the cycle of tightening monetary policy when the rate reaches the lower limit of the "neutral" for the country's economy range of 2.5–3.5%," they added.

"At the same time, we are optimistic about both the Norwegian (NOK) and the Swedish Krona (SEK), since the internal factors contributing to the growth of GDP remain strong, and central banks must keep the mood for normalizing the policy," the UBS experts said.

According to them, the discrepancy in the pace of economic development of the United States and the eurozone will be crucial for the pair EUR / USD, which is now trading well below the fair value range of 1.25-1.35. It is expected that the negative impact on the euro of such factors as Brexit and the Italian budget deficit will gradually disappear.

The material has been provided by InstaForex Company - www.instaforex.com