The latest bout of quantitative easing seems pretty bad for the dollar, but then again that’s what everyone thinks. People are piling into various assets as a result, whether it be gold, emerging markets stocks, U.S. stocks, or commodities. Thing is, while the dollar has plummeted over the last six months, it had also rallied quite sharply the six months prior. Thus it’s basically just back to December 2009 levels based on the Dollar Index (Bloomberg: DXY).
One shouldn’t forget that expectations can get baked into currencies, yet despite pretty negative sentiment, the dollar remains within its 2-year range. It’s pretty hard for anyone to be a dollar bull these days, but perhaps that’s a big reason to start thinking outside the box.