UBS: The dollar is heading for a difficult 2018

The US currency will most likely be disappointing next year against the euro, despite the expected continued interest rate hike by the Fed, according to experts from UBS.
The Fed is expected to raise the interest rate three times in the following year. Traditionally an increase in interest is assumed to be good for the US currency, so the forecast is a bit surprising.
Since the beginning of the year, the euro has risen by 11.5% against the dollar.
The financial institution's strategists believe that, fundamentally, the euro remains cheap and a better performance of European economies should channel a further appreciation of the single currency.
The bank expects the dollar to perform well against the Canadian dollar and the Japanese yen next year. The outlook for inflation in Canada remains weak, so the recent appreciation of the Canadian currency may have exhausted its strength.
Strengthening the power of the current Japanese Prime Minister will most likely trigger a further policy of incentives and low interest rates by the central bank. So, the weakness of the Japanese currency is likely to continue with full force, according to UBS.