U.S. Growth, Deficits To Push Dollar Lower, Real Yields To Support

• The U.S. dollar is expected to continue declining, pressured by rising trade and fiscal deficits along with recovering growth that is being powered by a rise in commodities prices, a fund manager and two economists said.
• However, a rise in real yields in the United States backed by a strong recovery in the economy will keep the dollar from falling drastically, Binay Chandgothia, managing director and portfolio manager at Principal Global Investors in Singapore, told the Reuters Global Markets Forum on Wednesday.
• "My sense is that the dollar weakens a tad more, (by about) 2%-5%, from here," said Chandgothia, whose firm manages nearly $545 billion in assets. He added that the dollar could get a lift from the U.S. Federal Reserve changing its stance as this will start pushing up real yields at the short-to-medium end.
• Robert Carnell, chief economist and head of research at ING Asia in Hong Kong, said he expected the Fed taper to likely come at a time when U.S. inflation will be dipping and prices in Europe will be picking up.

(Source: Reuters)