USD: Dollar-o-meter Still Points To USD Strength But A Peak Is Likely In Nov-Feb Period – Nordea

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The US Dollar is moving forward across the board. Can this continue for a long time?

Here is their view, courtesy of eFXdata:

Nordea Research discusses the latest findings of its dollar-o-meter model assessment for the USD direction.

“The dollar-o-meter is a way of trying to structure four drivers of the USD. It includes the core inflation outlook, the growth outlook, monetary policy and politics. Early in 2018, all drivers were turning supportive. What do they say today?..

Euro-area core inflation disappointments and still-stellar US data have translated into a dollar-o-meter still indicating dollar strength (three out of the four variables appear supportive). We still judge that a peak in the dollar is beckoning as i) relative core inflation, ii) relative growth and iii) monetary policy (relative liquidity) will turn against the dollar around year-end, while iv) relative politics are a neutral-to-negative driver,” Nordea argues.

“We earlier anticipated a more distinct peak in the dollar in Q4, but now see it somewhat later – in the November to February period,” Nordea adds.

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