30 May 2013
Flash: The Dollar Melt-Up - Nomura
FXstreet.com (Barcelona) - Nomura strategists Jens Nordvig and Ankit Sahni have taken a look at how to participate in structural USD strength.
They add that during the course of the past few months, the dollar has entered a new regime. They feel that we are observing a ‘bull dollar rally’: a dollar-strengthening trend which is happening in tandem with strong performance of risky assets and increasing optimism about US growth. Further, they note that the recent break-out in US yields cements this trend, (although it could test the resilience of risk assets if it continues apace). They write, “The main question is now how to best express the view. At this relatively early phase in the cycle, we think the most potent expression is long dollar positions versus low-yielding G10 currencies, such as CHF, JPY, GBP, EUR and CAD.”
They add that during the course of the past few months, the dollar has entered a new regime. They feel that we are observing a ‘bull dollar rally’: a dollar-strengthening trend which is happening in tandem with strong performance of risky assets and increasing optimism about US growth. Further, they note that the recent break-out in US yields cements this trend, (although it could test the resilience of risk assets if it continues apace). They write, “The main question is now how to best express the view. At this relatively early phase in the cycle, we think the most potent expression is long dollar positions versus low-yielding G10 currencies, such as CHF, JPY, GBP, EUR and CAD.”