The following is an excerpt from Shuli Ren | December 21, 2015 | Barrons.com |
The U.S. dollar index seems to struggle to get past the 100 mark, weakening on Friday after the Bank of Japan kept its monetary policies broadly unchanged. This morning, the People’s Bank of China raised its yuan fix rate higher for the first time in 11 days.
While long dollar remains the most crowded trade among fund managers, we want to know how much further does the dollar run, if at all? After all, the U.S. dollar index has already gained 37% off its May 2011 low, the third largest advance without a 15% decline since the index’s inception in 1967.
Don’t worry. A real bull run lasts a decade, according to CLSA‘s technical analyst Laurence Balanco. “These cycles suggest that the US Dollar Index is well into a seven-year rising cycle that should extend towards the next peak in 2018.”
According to Balanco, the next dollar target should be at 104-105, followed by 113-114. The dollar index closed its 2015 high on November 30, at 100.20. It closed at 98.71 on Friday.
“For long-term investors, a pullback towards 95-96 on the DXY should be seen as an attractive buying opportunity.” Got it. The dollar may be trading range-bound for a while then. Year-to-date, the Powershares DB US Dollar Index Bullish Fund (UUP) gained 6.9%.
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