Is A Dollar Rally About To Kill Risk Assets?

Now here’s a winning stat for you.  Based on the net speculative positions in the USD there is a 100% chance (based on past occurrences) that the dollar will rally from here.  According to a report today from Credit Suisse the US dollar has rallied 100% of the time from these levels on a 3 month basis.  On a 1, 2 and 6 month basis it has rallied 80% of the time:

chart

QE has been fully priced into the dollar and then some.  I believe the decline in the dollar has contributed substantially to the rally in risk assets in recent weeks.  If we see a reversion towards a more disinflationary outlook the dollar will serve as a substantial impediment to equities and commodities.

Source: Credit Suisse

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This post previously appeared at Calculated Risk >

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