The Dollar Effect

The U.S. dollar has turned out to be the currency of choice lately, with the greenback climbing to a two-year high of $1.2726 against the euro Thursday, as investors sought safety through the greenback.

"We are positive for the dollar against any major currencies, except from the Japanese yen," said Thomas Harr, senior FX strategist at Standard Chartered on CNBC Asia Pacific's "Protect Your Wealth" segment.

"One (reason) is the global recession, which tends to be dollar positive, or at least the recession we’re seeing in the developed world. The other is global deleveraging, which also tends to be dollar positive," explained Harr.

And with the world focused on these two issues, Harr said the greenback only stands to gain against the euro. "I think the risk is that we will see $1.20 sooner rather than later...But our forecast is $1.20 in the middle of next year."

Harr believed the dollar has room to strengthen even as the U.S. Federal Reserve looked set to ease interest rates at its next policy meeting end-October.

"(The Fed) will cut 50 basis points for the whole of this year, 25 next week is our call. We think that the rate will go down to one percent and the risk is clearly that they could go even further down, " said Harr. "We are looking for dollar strength no matter what happens."

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Catch "Protect Your Wealth" on CNBC's Asia Pacific network every Tuesday on "CNBC's Cash Flow," Wednesday on "Asia Squawk Box" and Thursday on "Capital Connection."