'Synchronized rate cuts could support dollar'

Some economists believe that the synchronized rate cuts by central banks in developed countries could be a factor supporting the dollar. According to Bloomberg and BIS data, 10 of the 11 major central banks in the world, including the Fed, are expected to cut rates in the second half of this year. This indicates the most intense synchronization in terms of rate cuts since 2008. When historical data is analyzed, the dollar gained more than 3 percent in value compared to developed country currencies in quarters where at least 80 percent of the central banks in question cut rates. The fact that the Fed's policy rate remained high among major developed country central banks also stands out as a factor supporting the dollar in this process. According to Mizuho Bank Strategist Vishnu Varathan, aggressive short positions taken against the dollar carry the risk of being “extremely wrong.” Varathan commented, “Interpreting the Fed's policy reversal as a definitive short position against the dollar is incredibly one-dimensional.” “Historically, the US and the Fed would have led this macro narrative, but now the US and the Fed are the last to ease,” said Frances Donald, chief economist at Manulife Investment Management. “It’s very hard for me to be pessimistic about the dollar because we see the Fed and the US having a level of economic resilience and exceptionalism that is far superior to their peers.”