Staying Long Dollars Still Makes Sense

Currencies continues to gain vs the US dollar, but this trend is unlikely to continue for long.

The Fed feels economy is not growing fast enough, which implies that any monetary tightening will have to wait until well into the third or fourth quarter of this year. This view is supported by the figures just released by the Chicago Fed. The National Activity Index for February was down 0.1% after rising 0.1% in January.

On the international scene the focal point today are the debt negotiations between Germany’s Chancellor Angele Merkel and Greek Prime Minister Alexis Tsipras. According to reports from Berlin Chancellor Merkel is under intense pressure from her own coalition partners to remain tough in her talks. Potential negotiations about Greece’s exit from the Eurozone are not supposed to be on the agenda. But any hint of the subject being broached will have an impact on the euro.

Consequently, staying in dollars remains the right strategy, even with the dollar showing some weakness.