The USD closed 2014 on a strong note and is entering 2015 reaching fresh highs. Fundamentals, technicals and flows all support ongoing USD strength, and warn of fresh USD highs ahead. The DXY USD index has jumped up to 90.74, the highest level in 9‐years. The acceleration in USD strength comes on the back of several dovish central bank comments (ECB, BoJ, PBoC) offset against the Fed’s Plosser (nonvoting hawk, retiring in March) paper that suggest that by “all of the policy rules we have analyzed indicate that maintaining the funds rate at the zero lower bound is unusually accommodative by historical standards. Even though inflation is below the FOMC’s longer‐run target”. Disappointing global PMIs have also supported a stronger USD.
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