Defiant Greenback Bulls


USD to climb higher and higher
United States: New Home Sales better than expected
Turkey: Erdogan takes on Central Bank …again!

Good morning,

Given the USD’s surge over the past 6 months, many have questioned how much further the Greenback can climb. However, our main conviction remains that the Dollar has a lot more room to strengthen, despite its sharp rise since mid-2014. Underlying that view is a US activity picture that remains solid and a Fed that is gradually approaching lift-off, which will likely keep the 2-year rate differential against the G-10 moving in favour of the Dollar this year.

The Dollar bull view has recently fallen out of favour, with many thinking the greenback will go sideways this year. This caution reflects the fact that US data has been more mixed recently and an expectation for a cyclical rebound in Europe, which some see as a catalyst for EUR/$ to rebound somewhat. In that context, the emerging compromise between Greece and its lenders is cited as a reason to buy the Euro.

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Global Macro-Daily Note 26th February 2015


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