The US dollar continues to march higher. I had the privilege of being on CNBC again to reaffirm my outlook. Following me soundbite, Ari Wald, a technician I respect and used to work with, gives a quick overview of the Dollar Index technical outlook. Click here to see the interview.
We agree that technical and fundamental considerations continue to favor a stronger dollar. Each dollar rally is unique. The Reagan dollar rally was driven by the policy mix in the US. Contrary to legend, Reagan pursued an expansionary fiscal policy, with tax cuts and defense and social spending increases. The Clinton dollar rally was fueled by flows into the US equity market and the tech boom and bubble. Both of those dollar rallies went beyond what many had expected. Both ended with the help of coordinated central bank intervention.
We argued that divergence is the key to the Obama dollar rally. Given that the Fed has not begun tightening and the ECB and many other central banks have not reach the peak of their easing, it is still the early days of the Obama dollar rally. If my analysis is correct, the Obama dollar rally will eventually take the euro back down toward its record lows.
Disclaimer
Cool Video: CNBC Power Lunch--Euro to Parity and Beyond
Reviewed by Marc Chandler
on
November 16, 2015
Rating:
Reviewed by Marc Chandler
on
November 16, 2015
Rating:
