Dollar will hardly rise on US growth – ANZ

ANZ analysts believe that it’s not by being the leading recovering economy that the US will see its USD rally: “With a basic balance deficit of more than 4% of GDP (more than USD600bn), and rates at zero, the flows to drive the dollar higher during risk-on simply don’t exist in the required magnitude in our view”.

So, the main beneficiaries of the US growth should be the emerging market currencies INR, KRW and TWD in a first note, followed by JPY, AUD and NZD.

Meanwhile, Europe’s structural problems should not affect the EUR that much, since its issues are mostly localized in the periphery. Adding to that are Fed’s and ECB QE and Europe’s coming current account surplus.

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