16 Jul 2013
Flash: DXY to appreciate over 40% from current levels - SocGen
FXstreet.com (Barcelona) - The cyclical bullish uptrend in the USD index remains in place and after a gain of about 10% over two years, according to Kit Juckes, Head of FX at Societe Generale, "I expect DXY to get back above 90 and to test 2005’s best levels, without actually going back anywhere near to the levels it reached in 2002, some 40% stronger than it is today."
As Juckes adds: "Recent moves have done nothing to shake either my confidence in a stronger dollar in the months/years ahead, or my belief that it is a recovery in a much longer-term downtrend unless the whole thrust of US policy changes."
The bias of the US, as Juckes notes, "is to fight a ‘currency war’ with more enthusiasm and better weapons than anyone else, and I can’t see that changing, thus a 10-15% appreciation as the US economy out-performs, the Fed tightens sooner than others and the commodity-exporting economies with overvalued currencies correct, seems appropriate." However, Juckes still suspect "the path to a stronger dollar will continue to be very uneven – two steps up, followed by one back, again and again…."
As Juckes adds: "Recent moves have done nothing to shake either my confidence in a stronger dollar in the months/years ahead, or my belief that it is a recovery in a much longer-term downtrend unless the whole thrust of US policy changes."
The bias of the US, as Juckes notes, "is to fight a ‘currency war’ with more enthusiasm and better weapons than anyone else, and I can’t see that changing, thus a 10-15% appreciation as the US economy out-performs, the Fed tightens sooner than others and the commodity-exporting economies with overvalued currencies correct, seems appropriate." However, Juckes still suspect "the path to a stronger dollar will continue to be very uneven – two steps up, followed by one back, again and again…."