Why We Believe the US Dollar Will Remain Strong in 2015
February 3, 2015
The US dollar bull market was surprisingly broad in 2014, gaining versus G-10 and EM currencies. Impressively, the USD trade weighted index rose about 12% - recording one of the largest appreciations since 1974. We believe there are many elements that should support a strong dollar in 2015 as well. First of all, as we have highlighted in past publications, we see some structural headwinds in full retreat, such as a massive slowdown in USD diversification and twin deficits more sustainable. But new factors could play a role in 2015, such as capital flows, M&A activity and relative divergences in G4 monetary policy serving as another key engine behind a USD bull market.