Head of strategy Department in the foreign exchange market Saxo Bank believes that the combination of geopolitical pressure may be the reason that the US dollar will lose global reserve currency status.
In the quarterly note on the prospects called “the World turns away from the Almighty dollar,” John hardy said that the U.S. is “increasingly dysfunctional,” and there is an urgent need to replace it.
Currency analysts have identified three geopolitical problems that currently affect the status of the dollar:
1. The continuing rise of China as he takes on a more prominent role in global trade and financial markets and, in particular, how it will drive policy and solve the problem of its “credit bubble” after the 19th party Congress scheduled for October, does not damage its internal economy and the global economy.
2. The North Korean regime seeking to preserve the credibility and inviolability of the nuclear powers and how it will affect China and the United States. but also how Japan would apply to this threat from the point of view of domestic and foreign policy.
3. Undermining the Transatlantic Alliance in the USA and Europe, and how Europe and the EU find their “support” as a more independent superpower – or not – by themselves after the elections in Germany
Hardy highlights the “de-dollarization” as a direct topic, which can be separated from the situation in China, as the country seeks to stimulate demand for your yuan. “China sees benefits from having its own currency plays a big role and displaces the role of the dollar in world trade,’ said hardy. – Initial focus is on the world oil trade, where China announced its intention to buy oil in yuan and allowing trading partners to settle the yuan in gold.”
Hardy added that although his long-term prospects of the U.S. dollar was negative, you may experience some short-term gains in connection with the appointment of the next fed Chairman.
Information-analytical Department Forex club