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A number of Wall Street and big international banks are forecasting a drop in the dollar as a result of the Fed’s decision to back off on raising interest rates in 2019.

Morgan Stanley, for example, says that the dollar has peaked and has forecast the yen climbing to 102 to the dollar and the euro to $1.31 by the end of 2019. Japan’s Nomura is projecting foreign selling of dollars.

To a degree, forecasts of a weaker dollar are a self-fulfilling prophecy. As expectations increase for a dollar decline, the cost of hedges to protect against that decline increase.

Under the Morgan Stanley forecasts, a EuroZone investors would see a loss of 0.35% on benchmark 10-year U.S. Treasuries even though they pay a dollar-denominated yield of 2.70% at the moment. Which certainly makes it clear why non-dollar investors would be looking to buy hedges on their currency risk.

A weaker dollar would–eventually–be good news for the revenue and earnings of U.S. exporters who were hit hard on a stronger dollar in 2018. In the third quarter of 2018, North American companies reported a $11.8 billion hit to earnings due to the effect of a strong dollar.

Yesterday the Japanese yen traded at 109.40 to the U.S. dollar and the euro at $1.1434. The Dollar Spot Index (DXY) showed the dollar up 0.23%.