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13 Mar 2013
Forex Flash: The coming dollar revival - Nomura
Nomura strategists Jens Nordvig and Ankit Sahni believe that the US dollar is about to launch a recovery and are watching equity related inflows as an indicator of future USD strength.
They begin by commenting that the dollar is trading better in 2013 and its correlation to risk assets is on the mend. However, at the same time, equity inflows are picking up and this has been important for the dollar dynamics in the past. They write, “Ongoing monetary easing and a weaker US data picture in Q2 may delay a broader dollar recovery. But if inflows into US risk assets continue to gather steam, the dollar should benefit eventually. Thus we intend to review our longer-term global USD forecast within the next one to two weeks, incorporating stronger USD inflows.”
They begin by commenting that the dollar is trading better in 2013 and its correlation to risk assets is on the mend. However, at the same time, equity inflows are picking up and this has been important for the dollar dynamics in the past. They write, “Ongoing monetary easing and a weaker US data picture in Q2 may delay a broader dollar recovery. But if inflows into US risk assets continue to gather steam, the dollar should benefit eventually. Thus we intend to review our longer-term global USD forecast within the next one to two weeks, incorporating stronger USD inflows.”