USD is very much unloved - BBH

The US dollar is very much unloved as the apparent stabilization of the political situation in Europe, and sustained pace of above trend growth contrasts with the US, where the political situation leaves much to be desired and the economy is uninspiring, according to the analysis team at BBH.  

Key Quotes

“The President's agenda of deregulation, tax reform, and infrastructure that had fueled the last leg up of the dollar's multi-year rally is now doubted, and those dollar gains have been unwound.”

“At the same time, the dollar's negatives are being exaggerated as the pendulum of market sentiment swings against it.  Yesterday's positive news included an unexpected drop in the weekly jobless claims for the period that covered the non-farm payroll survey.  Also, Leading Economic Indicators rose a stronger-than-expected 0.6% in June, the fastest since January and which matched the highest level since the end of 2014.”

“Despite what some argue the flattening of the yield curve tells us, the economic data shows no sign of an impending economic downturn.  Nor are investors abandoning the US.  The TIC data showed foreign demand for long-term US securities rose to $92 bln in May.  Such flows this year are running at more than twice last year's pace (~$48 bln vs. $22 bln monthly average).  Moreover, despite the preference for European shares over US on various grounds (including valuation) since May 1, the US S&P 500 has outperformed the Dow Jones Stoxx 600 for Europe by four percentage points.”