DEZ
News Release
Thursday 2 February 2006, 7:00 GMT Thursday 2 February 2006
Synthesis Bank
Synthesis Bank: The future of the USD in 2006
GENEVA, Switzerland, February 2 /PRNewswire/ -- Mr. Charles -Henri SABET, the founder and CEO of Synthesis Bank, is well known in money market by his extraordinary vision in the FX business.
His bank has been ranked recently as the best and most competitive Swiss leading online investment bank by the media in Swiss German region.
Here below is his analysis on the evolution trend of the US Dollar.
The major trend from 2002 to mid 2004 was the fall of the Dollar very over-evaluated, this move was exaggerated in the end of 2004 by the myth of central banks' diversification of reserves.
2005 was therefore a corrective year for the US Dollar, especially against the European currencies and the Japanese Yen
I don't think the future of the US Dollar depends on the US trade deficit problem, which is mainly due to the globalization effect and it seems to have reached an inflexion point.
Several factors let us believe that the fall of the Dollar will be gradual linked with a slowing housing market in the United States and various adjustments in Asia.
The US currency could reach its high in the first quarter and will end the year at lower levels.
The weakening of the US Dollar will not be synchronized against all currencies; therefore the movement of the currency pairs will not be correlated.
Typically, the market anticipates an end of the interest rates' hikes in the United States and the beginning of higher interest rates in Europe.
I believe that the Euro and the Chf have hit their bottom line against the Usd, which stands at around 1.1700 for the Euro and 1.3300 for the Chf.
We can bet on higher European currencies with a first target of 1.2350 and then 1.2900 for the Euro/Usd. Regarding the Usd/Chf, targets are 1.2450 and 1.2050. These levels have already been seen several times, hence they do not predict any "crash" of the US Dollar, but a simple adjustment.
In Asia, the Yen will be strengthening, but will be penalized by the big interest rate differential between Japan and the United States.
The upward movement will be originated by the enthusiasm for other Asian currencies. This implies an adjustment of the Japanese Yen against the other Asian currencies. Our targets on the Usd / Yen are 112 and 109 at the end of this year.
The most interesting issue is about the Chinese Yuan which will synchronize the movement of the other Asian currencies, strengthening together with the Korean Won, Taiwan Dollar and the Indonesian Rupiah.
All these currencies will probably rise 10% against the US Dollar and 4% to 5% against the Yen
The best solution to hedge oneself against a gradual weakening of the US Dollar is to buy gold.
The latter should move up to 615 against the Usd and even 750.
Although the price of gold has already moved up considerably, several elements can explain the continuation of this strengthening, in particular the correlation of the price of Gold with other metals, which are supported by the improving world economic growth and the limited supply of gold by producers.
Trading Floor : tradingfloor.com
Synthesis Bank : synthesisbank.com
Contact:
Pierre-Yves Revaz
Head of Marketing and Communication
Synthesis Bank
tel. +41-22-317-95-00
Distributed by PR Newswire on behalf of Synthesis Bank
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