The divergence in global monetary policy - as the Federal Reserve prepares for its first rate hike in mid-2015 while counterparts in Japan and Europe consider adding stimulus - will drive the U.S. dollar higher this quarter, a CNBC survey of currency strategists and traders shows.
The rise of the dollar index – a gauge of the greenback's value against a basket of six major currencies – has been virtually unassailable, racking up gains for a record 12 straight weeks – its longest winning streak since its 1971 free float under President Nixon.
"We expect a strategically strong dollar over an extended period measured in months and years," said David Kotok, chief investment officer at U.S. money manager Cumberland Advisors with $2.3 billion in assets under management. "Our central bank is at neutral and unlikely to revert to QE (quantitative easing) again. The rest of the world has not reached that stage."
Kotok is not alone. Eighty one percent of respondents expect the greenback to set new highs, while just under a fifth believes the rally will fade.
In a research report on September 30, Deutsche Bank flagged the dollar's ascent as a major headwind for the commodities complex and predicted that the move has further to go.
"A new long-term uptrend in the U.S. dollar is now firmly entrenched and will continue to pose risks to large parts of the commodities complex," Deutsche Bank strategists said in their Commodities Quarterly. "On our reckoning we are only half way through the current U.S. dollar cycle in duration and magnitude terms."