Morgan Stanley, that’s who.
They go on (bolding mine):
Currencies and policy:
- The Fed has joined the trend among G10 central banks of referencing its currency within the context of overall policy.
- Until recently, this had been confined to central banks of high-beta currencies, justified by the perception of overvaluation.
- This has broadened to include other major central banks, where currency valuation extremes are less evident.
- In the past two months, the ECB signaled, via its intention to expand its balance sheet, that a weaker EUR is welcomed.
- On aggregate, the EUR is not overvalued, but it is for many peripheral EMU countries, in our view.
Watching the USD:
- While recent USD strength has been noted in the FOMC minutes, the USD is not generally perceived to be overvalued.
- This leads us to believe the pace of USD gains, rather than the level, could have prompted the reference in the FOMC minutes.
- We see the current corrective setback as likely a temporary pause in the longer-term bullish trend.
- We adopt a buy-on-dips strategy for USD vs. G10, supported by structural longer-term portfolio inflows to the US.
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Hmmm.
Ok, this is my second post in succession with investment banks saying to buy the USD. I better find a counter, lest the tin hats read too much into it, jump on this trend (the trend of my posting bullish US dollar things, that is) and apply the hatin’
