“We expect USD strength across the rest of the G10 complex to continue through 2015, with the USD likely posting a 7% appreciation versus the majors by end-2015 after the 10% appreciation recorded in the second half of last year.
So far, the majority of the USD TWI strength against the rest of the G10 has come from two non-Dollar factors: (i) substantial easing surprises by the BoJ and ECB and, to a lesser extent, Norges Bank and the Riksbank, alongside more dovish rhetoric from the Bank of England; and (ii) sharp falls in commodity prices have weakened the AUD and CAD.
Through 2015, we think the driver of Dollar strength will shift and that the USD will increasingly be driven by Fed policy and broader US domestic conditions.
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