When multi billion dollars currency traders make prediction like this, and they recognize that the ECB has been behind the curve and that the time may have come to move back into the greenback, don't dismiss it lightly. I can see the logic in this article. I think short terms US dollars has few friends, but sentiment is undergoing a turn as we speak. By middle of the year, dollar will likely to strongly rebound. Bear case for GOLD ?? Remain alerts for turn of event.
Bloomberg reports:
"Ben S. Bernanke's decision to lower interest rates 1.25 percentage points last month will end the dollar's two-year slide, according to the world's biggest currency traders."
Who is of this opinion? Deutsche Bank - the largest global currency trading firm, UBS AG, the second largest, BNP Paribas - Bloomberg's most accurate of currency forecasters that Bloomberg follows.
"Paris-based BNP, the most accurate of 31 firms surveyed about their currency predictions for the second half of 2007, is among the most bullish on the dollar in 2008 with its forecast of $1.36 per euro by yearend. Zurich-based UBS predicts $1.35. The median estimate calls for a 5.4 percent increase to $1.40 by the end of this year and a 6 percent gain to $1.32 in 2009. The dollar weakened 10.6 percent in 2007 and 11.4 percent in 2006 after strengthening 12.6 percent in 2005."
"Deutsche Bank AG, the world's largest currency trader, predicts an 8 percent gain in the dollar this year as the euro- zone economy expands 1.6 percent, lagging behind the 1.9 percent growth projected for the U.S."