The U.S. dollar has experienced relentless selling pressure according to Morgan Stanley’s Calvin Tse:
USD Funding: As has been the theme, we saw continued USD selling this week. Indeed, USD has been sold for the fourth week in a row. Bigger picture, this represents USD selling for 14 out of the past 15 weeks. Moreover, last week’s flow was in the seventh percentile, indicating that USD net selling has only been greater than this amount 7% of the time over the past two years.
USD Selling Momentum Accelerates: On the back of strong USD selling on high volume, our gauge is indicating that USD selling momentum has entered into significant levels. Our reading is close to -3.0, which signals heavy USD-bearish momentum. The last time we’ve seen levels as extreme as this was in mid-August.
Despite the above, the U.S. dollar is still at a higher level than it was a the beginning of 2010, based on the U.S. Dollar Index (DXY:IND on Bloomberg), which measures the dollar vs. a basket of currencies. So it’s not all that wild to think the dollar can keep falling from where it is today.
(Via Morgan Stanley, MS FX Flows Chart Pack, Calvin Tse, 20 September 2010)