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31 Mar 2015
Barclays – How far can the USD go? – eFXnews
FXStreet (Barcelona) - The eFXnews Team notes Barclays views that USD has substantial room for further upside as the dollar’s valuation is far from stretched.
Key Quotes
“While our BEER model suggests that the USD is 9.6% overvalued, equivalent to a 0.9 standard deviation move relative to fair, we anticipate that the misalignment could move into the 1.5- 2.0 standard deviation range relative to fair value as the US business cycle continues to improve ahead of a sluggish world. Indeed the USD REER seems to be strongly correlated with the US output gap relative to its trading partners, " Barclays notes.”
"Under all other valuation metrics, the USD seems to have even more room for appreciation, which should ease valuation concerns from the USD path in the near term, in our view," Barclays finds out."
“All in all, Barclays acknowledges that the risk-reward in long USD positions has deteriorated, but believes there is still substantial room for further upside in the USD as its valuation is far from stretched and cyclically the US economy is still poised to outperform.”
“In line with this view, Barclays forecast 5% USD REER appreciation by year-end, and sees EUR/USD at 0.98 around the same time.”
This content has been provided under specific arrangement with eFXnews.
Key Quotes
“While our BEER model suggests that the USD is 9.6% overvalued, equivalent to a 0.9 standard deviation move relative to fair, we anticipate that the misalignment could move into the 1.5- 2.0 standard deviation range relative to fair value as the US business cycle continues to improve ahead of a sluggish world. Indeed the USD REER seems to be strongly correlated with the US output gap relative to its trading partners, " Barclays notes.”
"Under all other valuation metrics, the USD seems to have even more room for appreciation, which should ease valuation concerns from the USD path in the near term, in our view," Barclays finds out."
“All in all, Barclays acknowledges that the risk-reward in long USD positions has deteriorated, but believes there is still substantial room for further upside in the USD as its valuation is far from stretched and cyclically the US economy is still poised to outperform.”
“In line with this view, Barclays forecast 5% USD REER appreciation by year-end, and sees EUR/USD at 0.98 around the same time.”
This content has been provided under specific arrangement with eFXnews.