Nomura: The dollar may gain 7% this year

The jump in the dollar by 25% during the period from June 2014 to January 2016 was the most extreme from the 80s and force Fed to reconsider its strategy on tightening monetary policy, say analysts at Nomura.

Markets continue to expect an increase in rates, although expectations in this regard are weaker than at the end of last year and early this year. Against this background, the dollar will likely continue its growth, but with far less convincing pace.

Main engine of the upward trend will remain interest rate differential and market expectations of further tightening of monetary policy in the US, say from Nomura. It is theoretically possible dollar index to rise by 11% this year, but considering the tone of the statements of Fed is already softer, strategists believe that the likely pace of growth is around 7%.