Archives

The US Dollar – One Hell of a Crowded Trade

By Chris Lowe, Editor-at-Large on March 11, 2015

For now at least, confidence in paper dollars is high…

The US Dollar Index – which measures the dollar’s strength against a trade-weighted basket of six major trading-partner currencies – is at the highest level it’s been since September 2003.

There are three main reasons for renewed dollar strength:

1. The Bank of Japan and the European Central Bank continue to debase their currencies by way of QE while the Fed leaves its QE program on pause.

2. Investors are expecting higher interest rates in the US, which would mean a higher yield on their dollar deposits.

3. Investors are shunning risky stocks and seeking out traditional safe havens of US dollar cash and Treasury bonds.

How long will dollar strength last?

It’s impossible to say. But this is starting to look like one hell of a crowded trade…

And crowded trades have a habit of unwinding fast!

 

©  Bonner & Partners, 55 NE 5th Avenue Suite 100, Delray Beach, FL 33483, USA. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from the publisher.

Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not designed to meet your personal financial situation – we are not investment advisors nor do we give personalized investment advice. The opinions expressed herein are those of the publisher and are subject to change without notice. It may become outdated and there is no obligation to update any such information.

Investments recommended in our publications should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question. You shouldn't make any financial decision based solely on what you read here. 

Bonner & Partners writers and publications do not take compensation in any form for covering those securities or commodities.

Bonner & Partners expressly forbids its writers from owning or having a financial interest in any security that they recommend to their readers. Furthermore, all other employees and agents of Bonner & Partners and its affiliate companies must wait 24 hours before following an initial recommendation published on the Internet, or 72 hours after a printed publication is mailed.