Todd Elmer, a currency strategist at Citi, told CNBC’s “Street Signs” on Monday that he expected the strength of the dollar and other safe-haven currencies, such as the yen, would persist amid the escalation in geopolitical tensions.
“It’s obvious that the immediate response to the U.S. strikes in Syria has started to wane somewhat, but I do think there will be a bit of an aftertaste in terms of the market paying a bit more attention to geopolitics,” Elmer said. “This is going to raise questions in investors’ minds as to whether this will provoke more tensions with Syria’s allies, Russian and Iran, and whether or not they should extrapolate this use of military action to other conflicts such as with North Korea.”
Elmer also noted that the greenback’s muscle flexing wasn’t just about geopolitics, with the U.S. Federal Reserve also appearing to lean toward hawkish.
In Fed minutes released last week, the U.S. central bank indicated it would begin to unwind the $4.5 trillion in bonds it’s holding on its balance sheet and that it was likely on a faster trajectory for interest rate hikes.
Others were less certain the greenback would continue to track higher, at least not across the board.
