Small overweight on US dollar - Commerzbank

Despite the pronounced US dollar strength in Q4, analysts at Commerzbank expect the dollar to gradually strengthen further.

Key Quotes

“With the ECB and BOJ for the time being stuck in the Japanese trap of low inflation and low interest rates, central bank divergence should fuel rate differentials and thus US dollar strengthening. We acknowledge, however, that too much dollar strength could reduce the Fed’s tightening pace.”