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May 05, 2015

May 05, 2015

Will The Dollar Resume Its Rally? 

We think so, but only after the dollar falls for a few more weeks. We believe that it will rally again later in 2015, on the basis of central bank policy — which is leading up to tightening in the U.S., but still in serious easing mode in most of the world.  We also think the Dollar will be supported longer-term by big Dollar-denominated debts accumulated over the past several years by foreign sovereigns and corporates; and we think that continued deceleration in the growth of the U.S. current account deficit will also be supportive.

In last week’s Commentary, we also discuss:

  • Dollar strength leads to mediocre U.S. earnings.
  • Chinese government keeps boosting Chinese stocks.
  • Clouds on the horizon for the U.S. Federal budget.
  • Market summary.