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.